US Dollar Weakens As Economy Adds Disappointing 49k New Jobs in January

The US dollar weakened against its currency peers to close out the trading following a disappointing January jobs report. The greenback, which has turned bullish to kick off 2021, took a breather as the broader financial markets tried to process the labor data and the overall economic trends. If the coronavirus economic recovery fails to accelerate, how will the buck perform?

According to the Bureau of Labor Statistics (BLS), the US economy added 49,000 new jobs, below the median estimate of 50,000. The unemployment rate fell to 6.3%, lower than the market forecast of 6.7%.
In December, the labor market shed 227,000 positions and recorded a jobless rate of 6.7%.
Most of the employment declines were situated in leisure and hospitality (-61,000), retail trade (-37,800), transportation and warehousing (27,800), and manufacturing and construction (-13,000). There were some notable gains, particularly professional and business services (97,000), government (43,000), and information (16,000).
The labor force participation rate slipped to 61.4%, average weekly hours edged up to 35, and average hourly earnings rose just 0.2%. The jobless rate dropped but only because more Americans left the labor force.
The lackluster employment numbers suggest that additional fiscal stimulus will be unleashed as the road to full employment will inevitable be a long journey.
On Thursday, the US government reported that the number of Americans filing for unemployment benefits fell to a nine-week low of 779,000, below the market consensus of 830,000. When the additional 348,912 federal applications were added, the number of jobless claims continue to top one million.
In other data, the trade deficit narrowed slightly to $66.6 billion in December, with exports rising 3.4% to $190 billion and imports climbing 1.5% to $256.6 billion. The Bureau of Economic Analysis (BEA) reported that as a percentage of the gross domestic product (GDP), the goods and services gap was 3.2% last year, up from 2.7% in 2019.
The bond market was mixed at the end of the trading week, with the benchmark 10-year Treasury up 0.105% to 1.145%. The one-year note tumbled 0.028% to 0.063%, while the 30-year bond surged 0.139% to 1.938%.
The US Dollar Index, which gauges the greenback against a basket of currencies, declined 0.41% to 91.15, from an opening of 91.49. The DXY is poised for a weekly gain of about 0.6%, adding to its year-to-date rally of 1.3%.
The USD/CAD currency pair fell 0.33% to 1.2782, from an opening of 1.2827, at 14:27 GMT on Friday. The EUR/USD jumped 0.49% to 1.2022, from an opening of 1.1965.
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Original from: www.earnforex.com