North American Summary and Highlights 2 Feb

North American session

The USD rose sharply through the North American session on the back of the much stronger than expected January employment report. USD/JPY rose nearly two big figures to 148.50, while the USD rose less sharply against the European currencies with EUR/USD losing one figure to dip below 1.08. Equities advanced despite rising YST yields, but the commodity currencies still fell, AUD/USD to near .65 from around .66. Oil continued to fall.

January’s non-farm payroll increase of 353k with 126k in net upward revisions to November and December was well above consensus and a 0.6% increase in average hourly earnings was an even more striking upside surprise, though possibly influenced by a sharp dip in the workweek to 34.1 from 34.3 hours. Unemployment, unchanged at 3.7%, was lower than expected, while average hourly earnings also saw upward back revisions with December revised to 4.3% yr/yr from 4.1% with January higher still at 4.5%.

European morning session

The USD was generally weaker through the European morning, except against the JPY, with USD/JPY gaining around 20 pips to 146.60. EUR/USD was up 10 pips o 1.0885, and there were similar gains for GBP and AUD. However the NOK fell back with EUR/NOK rising around 4 figures to 11.39, perhaps helped by another small rise in unemployment. The strength of the riskier currencies against the USD, and particularly the JPY, was no doubt helped by solid equity market performance following the new high seen in the S&P 500 in the US on Thursday.

Datawise there was little of note, although French industrial production rose much more than expected at 1.1% in December.