Despite that fact that the data on Non-FarmPayRolls was below the forecast (151 000 against the forecast of 190 000 and 262 000 new jobs in December), the USD has grown against the major currencies. The rise was caused by the other data on the US labor market in January.
Unemployment rate fell by 0.1% (4.9% versus the forecast of 5.0% and 5.0% in December), hourly wages rose as well (0.5% versus the forecast of 0.3% and 0% in December).
On Friday, oil prices of crude oil Brent fell below 34.00 USD per barrel. The price of gold went up, reaching last year highs and closing above the level of 1170.00 USD per ounce last Friday.
This Monday, the USD started with the downward correction. However, in the pair with the Yen, the USD continues to rise.
The data on the US labor market along with the inflation rate and GDP are crucial for determining future monetary policy by the US Fed. Despite the decrease of new jobs in January, unemployment rate has dropped and hourly wages have increased as well. Therefore, we cannot say that the state of the labor market has deteriorated.
Last week, the USD fell against the major currencies. The decline in the USD was caused by poor data on business activity index in the USA 5.3.2 in January against the preliminary value and the forecast of 53.7), reaching the lows since October 2013. As the service sector accounts for 90% of the US economy, the market strongly reacted to the poor data.
This week can be important for determining movement direction of the USD until the US Fed meeting in March 16, when the interest rate decision will be adopted. By the end of 2016, the key interest rate shall be increased up to 1.375% as has been announced earlier by the US Fed. Therefore, it is expected that this year the rate will be raised 3-4 times, if the growth rate will be 0.25% at each meeting taking into account that the current rate is 0.5%.
However, du to contradicting statements by the US Fed representatives related to the monetary policy tightening, the plot thickens.
Some speeches by the US Fed officials are scheduled for this week, including the speech by Mrs. Janet Yellen, the head of the US Fed, and Mr.Williams, FOMC member, which may shed light on future planes of the US Fed.
The data on German trade balance and industrial production will become known on Tuesday, 9 February 09-00 GMT+2). Quarterly expectations of the UK GDP rate, as per National Institute of economic and social research (NIESR) will be released on Wednesday, 10 February, at 17-00), and the speech by Glenn Stevens, the head of RBA will be known on Friday, 12 February at 01-30. The data on European GDP in Q4 will be published on Friday 12 February, at 11-00 and the level of retail sales in the USA will be released on Friday 12 February at 15-30.