Nonfarm Payrolls Data Shakes Dollar, Focus Shifts to the Fed
The US dollar pared its gains on Friday (March 6th) after the nonfarm payrolls (NFP) report showed a contraction in the labor force in February, bolstering the argument that the Fed still has room to cut interest rates. Payrolls fell by 92,000, while the unemployment rate rose to 4.4%.
The market reaction was immediately evident in the dollar index. The DXY fell to 99.063 from 99.308 before the release, down around 0.25% in its initial response to the data, and then stabilized at 99.34.
Beyond the weak employment headline, wage details kept the services inflation narrative "sticky." Average hourly earnings rose to 3.8% (yoy) from 3.7% previously, giving some market participants reason to remain cautious despite the negative payrolls figures.
The report also recorded downward revisions to the prior periods (January and December), reinforcing the impression that hiring momentum is weakening more broadly than initially indicated. In a policy context, the combination of negative payrolls and downward revisions typically depresses yields and the dollar, while simultaneously reviving pricing in interest rate cuts.
Source: Newsmaker.id
