As the US Federal Reserve is watching developments and economic data to determine its direction for the coming period, US employment data released today makes the markets perplexed. The labor market added only 20k jobs, far below expectations, at 185k, while unemployment fell from 4.0% to 3.8%. As for wage rates, they rose by 0.4% on a monthly basis, and participation rates stabilized at 63.2%.
However, despite the negative data released, the US dollar may not be affected by these data for a number of reasons, most notably; the negative data is largely due to the government closure, which was the longest closing period in history, leading to data distortion. The pace of wage growth, which reflects the strength of the sector as a whole, is expected to have a significant impact on the pace of inflation growth. The whole is particularly stable with participation rates at a time when unemployment is falling.
The EURUSD recovered from a low of 1.2290 as the European Central Bank pledged to raise interest rates until the end of 2019 at the latest. As for the BRICT developments, uncertainty continues to dominate the markets over UK exit from the EU before the March 29 deadline. Which caused the pound to fall against the dollar about 40 points from a two-week high to 1.31 levels.