Lower Unemployment in US Boosts Dollar

The US dollar advanced today after the report showed that the unemployment rate in the US unexpectedly dropped last month even though the non-farm payrolls were far worse than the experts promised because of the winter storms.

The forecasts promised the unemployment rate to rise slightly in January from 9.4 percent to 9.5 percent, but it surprised market participants falling to 9.0 percent. At the same time the non-farm payrolls also surprised traders, but the surprise was unpleasant as the nonfarm payroll employment alling to 9.0 percent, while it was expected to rise by 138,000. In December the non-farm payrolls grew by 121,000. The Labor Department reported that 886,000 Americans weren’t able to get to work because of bad weather.

Mary Nicola, a currency strategist at BNP Paribas SA, said:

As the focus shifted to the unemployment rate instead of the headline nonfarm payrolls, we saw euro-dollar breaking lower. Risk appetite today will be hard to determine as events in Egypt unfold.

EUR/USD dropped from 1.3633 to 1.3581 as of 20:21 GMT, posting the third day of declines. GBP/USD fell from 1.6135 to 1.6092, while USD/JPY advanced from 81.62 to 82.22.

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