US Dollar Uncertain After-NFP Report As CAD Rises on Employment Data

The US dollar reasserted itself as omicron jitters eased, gaining moderately against major currencies and remaining firm in the emerging market arena.  The dollar index rose 0.10 percent to 96.12, after pushing higher to 96.17.

The unemployment rate fell sharply by -0.4% to 4.2%, better than expected at 4.5%. The labor force participation rate rose to 61.8%. Average hourly earnings rose 0.3% mom, below expectations of 0.4% mom.

The number of people employed in the NFP sector of the United States in November increased by only 210 thousand, which is significantly below expectations of 525 thousand people. So far this year, monthly job growth has averaged 555,000. Total employment fell by -3.9 million, or -2.6%, from pre-pandemic levels in February 2020.

Kristalina Georgieva, the IMF’s Managing Director (MD), said on Friday that she had been concerned that the global economic recovery was losing steam before the Omicron variation appeared. As a result, global growth estimates are likely to be revised downward, she said, adding that the new variant’s quick spread could erode confidence.

Georgieva went on to say that the US economy’s strong performance is having a favorable impact on other countries, but that the US must take efforts to manage inflation. She went on to say that tariff reductions could benefit the global economy and that the US Trade Representative’s investigation into prospective reductions encouraged her.

Canadian Dollar Rises on Employment Data

In November, net employment in Canada increased by 153.7k, compared to 31.2k in October, and market forecasts of a gain of roughly 37k. Employment increased for both full-time (79.9k) and part-time (73.8). Strong hiring in the services sector was primarily responsible for job creation. The unemployment rate has dropped from 6.7 to 6.0 percent.

The participation percentage has reached a plateau of 65.3 percent.
The Canadian currency has recently been harmed by global uncertainty and a drop in oil prices. The loonie recovered today, with the USD/CAD falling from 1.282 to 1.274. The case for the Bank of Canada to begin raising interest rates next year is strengthened by further improvements in the labor market. The Bank of Canada suggested that the program may begin in the second or third quarter. Markets have already discounted the first hike at the end of the first quarter.