Why Dollar Is Well Bid Despite Disappointing Non-Farm?

Why Dollar Is Well Bid Despite Disappointing Non-Farm?

12 May 2016, 08:48
Roberto Jacobs

Why Dollar Is Well Bid Despite Disappointing Non-Farm?

After Friday’s worse than expected non-farm payroll report, after initial jolt, Dollar has snapped back and still remains quite well bid against number of currencies. Euro, Pound, Franc, Aussie, yen, not a single currency has broken above Friday’s high against Dollar.

So, what makes Dollar a bit strong, despite disappointing payroll and fading rate hike expectations? Just one hike is marginally expected this year and that in December.

It is the earnings growth, which makes the payroll report a much better looking for Dollar. We have worked out the wage growth data in the chart above, so you can see, what FOMC means, when they say, earnings are growing at solid rate.

  • In past one year to April, weekly earnings for all private has gone up by an average 2.5%. Even earnings have gone up by 0.5% (lowest among all sectors) in mining and logging, which has been suffering major downturn.
  • In financial services earnings have gone up by more than 4.1%.
  • 7 out of 18 major industries in U.S. saw earnings growth above average.

Now add additional income arising from lower fuel and imports price and you will see, how U.S. consumers are sitting at much better position.

Only concern for FED has been the revision in consumer behavior, they just stopped being a spendthrift.

The material has been provided by ifx_logo.gif

Share it with friends: