The market expectations of a probable U.S. interest rate increase in March were fully cemented by February’s solid NFP headline figure of 235k which illustrated steady growth in the U.S. labor markets. Although average hourly earnings may have missed expectations, the unemployment rate fell to 4.7% simply displaying U.S. labor force resilience in a period of uncertainty. Economic data from the States continues to follow a positive trajectory and with the positive U.S. jobs data adding to the basket, the prerequisites needed for the Fed to pull the trigger next week have been successfully achieved.
Although some concerns may still linger in the background regarding the ongoing Trump uncertainties, today’s data has visually shown that wages grew and employment rose in the first month of Donald Trump’s presidency. The overall economic outlook for the U.S. continues to look encouraging with further gains expected on the Dollar as speculators bet on the Fed raising U.S. interest rates beyond March.
It should be kept in mind that the depreciation of the Dollar following the firm U.S. jobs data has nothing to do with a change in sentiment, but potential profit-taking ahead of the weekend. The technical correction may come to an abrupt end with bulls back in action when the Federal Reserve raises U.S. interest rates next week.
From a technical standpoint, the Dollar Index bulls need a solid break and weekly close above 102.00 to open a path higher towards 102.50.