Positive NFP Wage Report

The U.S job growth went up in January with wages also going up. The surge in these data is their largest annual gain in more than 8-1/2 years and increases expectations that inflation will go even higher this year with the labor market hitting full employment.

The Nonfarm Payrolls went up by 200,000 jobs last month after recording 160,000 in December. The unemployment rate, however, remained unchanged, standing at a 17-year low of 4.1%. The Department of Labor further announced that average hourly earnings rose 0.3% in January to $26.74.

A negative data from the NFP is the workers hours. The average workweek plunged to its shortest in 4 months – just  34.3 hours a week.

The Greenback has been sliding over the past few weeks but it ended up as the third best currency last week mostly due to the positive NFP reports. The USD was already recording gains against some currencies but then the Greenback spurted higher as a knee-jerk reaction.once it was announced that both wage growth and jobs growth were better-than-expected.

Analysts believe that the positive NFP report is an indication of the strong momentum in the economy, which increases the possibility that the Fed will become a bit more aggressive in raising their interest rates this year.

The strong NFP report and the expectation of a rate hike in March saw the greenback rising against most of the major currencies.

Yen, Aussie

The Japanese Yen was the second weakest currency last week after the Aussie. All indications point to the fact that the yen has resumed taking directional cues from bond yields as most of the yen pairs with the exception of AUD/JPY were tracking the increase in bond yields.

Analysts revealed that the rise in bond yields is due to two main reasons; the renewed expectations that the Fed will continue to hike this year and an increased expectation that the ECB will tighten its monetary policy very soon.

The Japanese Yen performed poorly against most of its major competitors, with the pair of EUR/JPY closing the week trading at 137.16. The pair went down by 1.62% from the previous week.

Trade of the Week

Our ForexSignal Team sent an order to buy the EURJPY at 135.90 at 9:05pm New York time on Wednesday. The next day the trade achieved Target 3 success for an overall maximum possible move of 158 pips.