Dollar Surges on Solid Non-farm Payroll Data

February 2, 2007

Non-farm payrolls added 111,000 jobs in January and the U.S. unemployment rate rose to a four-month high of 4.6 percent, the Labor Department reported Friday. Economists expected unemployment to remain at December’s level of 4.5 percent. A gain of 150,000 was expected in the Non-farm payrolls figure.
According to the Labor Department the majority of the hiring took place in the service sector, which added 104,000 jobs, while manufacturing posted its seventh straight monthly loss.
The 111,000 payroll gain followed an upwardly revised 206,000 jobs created in December and 196,000 in November, the department said. The department initially reported 167,000 jobs created in December and 154,000 in month of November.
Average hourly earnings rose by 0.2 percent to $17.09, which was less than a gain of a 0.3 percent forecast.
As seen on the one minute of EUR/USD, the dollar started weakening at 08:28 pm. Two minutes later as the negative number was released the EUR/USD broke the 1.3053 level (two week high). The surge in euro was short-lived as the positive revisions of the non-farm payroll numbers for December and November followed the January release. The market consolidated into a bearish descending triangle for the next 30 minutes which was followed by a plunge in EUR/USD as the dollar strengthened.

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