Welcome to another monthly review of the US Non-Farm Payroll. The EUR/USD currency pair often reacts strongly to this economic event and hence it is important that we understand the nature and risks.
In the previous US Non-Farm Payroll, the NFP was better than expected unadjusted. It clocked an increase of 244k. This contributed greatly to the growing sentiment that the US job market is improving. Having said so, the overall unemployment rate increased back to 9% and caused some risk aversion.
Looking at the EUR/USD currency pair chart above, the initial reaction to the release of the US NFP was a knee jerk reaction to the downside followed by a bullish spike. Such quick volatility is typical of the US NFP and has the potential to wipe off positions on both sides.
The US Non Farm Payroll turned out to be much weaker than expected. Clocking in at an increase of 54K this is unexpected and sentiments were crushed. The apparent improving conditions of the American employment market turned out to be not as strong as hoped. Furthermore the unemployment rate, a very sensitive issue had climbed again to 9.1%. Sentiments were further affected and hence we noted the knee jerk reaction to the downside.
The EUR/USD proceeded to a bullish stance as an aftermath probably due to investors selling off their US Dollars in favor of the Euro in a flight away from the American economy.
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