US Dollar Skyrockets As Fed’s Forward Guidance Looks In Jeopardy

The US Dollar (USD) gained strength on Friday against all the major counterparts following the upbeat economic reports during the Mid-American Session.  Not to mention, the Nonfarm Payrolls and ISM Non-Manufacturing PMI, both came out far better than expectations thus spurring huge bullish momentum in the price of greenback.

eurusdi-h4

The Euro (EUR) slid down broadly against the US Dollar (USD), dragging the price of shared currency to less than 1.2520, the lowest level in about two years. Like was the case with cable which slumped below the 1.6000 milestone for the first time in as many months.

Nonfarm Payrolls

The nonfarm payrolls remained 248,000 last month as compared to 180,000 in August, up beating the average forecast of 215,000 by a long shot. Generally speaking, a higher nonfarm payroll reading is considered positive for the US economy thus a better than expected actual outcome spurred sharp bullish momentum in the US Dollar Index which gauges the value of greenback against the basket of six major peers.

Unemployment Rate

The rate of unemployment remained 5.9% in the US during September as compared to 6.1% in the month before, exceeding the average forecast of 6.1%, a report by the labor department revealed today. The jobless rate figure proved to be a major blow for the Federal Reserve’s forward guidance stance and fueled rate hike optimism among the investment community.

ISM Services PMI

The Services Purchasing Managers Index (PMI) remained 58.6 points in September as compared to 59.6 points in the month before, exceeding the median projection of 58.5 points, a report by the Institute of Supply Management (ISM) said today.

Conclusion

The US Central Bank is very likely to continue the aggressive monetary policy stance in the near future since the US economy is showing solid progress even without the stimulus. 

fxopenbroker@gmail.com'
Usman Ahmed

Usman Ahmed is an individual forex trader and market analyst. He holds a Masters of Business Administration (MBA) degree. His work includes fundamental and technical reports on various currency pairs, commodity futures and stock markets. His technical analysis features price action strategies.

with No Comments 4816

Share: