Unemployment Rate Falls to 9-Year Low. USD Gains

USD

After falling most of yesterday’s session, the U.S. dollar traded in a mixed direction overnight. Traders seemed tentative to move the greenback in definitive direction ahead of this morning’s much anticipated Non-Farm payrolls data.

This morning’s print did not disappoint. U.S. hiring expanded 178K in November, up from a downwardly revised 142K in the month prior. The unemployment rate fell to a nine-year low of 4.6%. The steady labor situation is a welcome sign as the Federal Reserve looks to raise interest rates later this month. Improving economic data will increase odds of future rate hikes into 2017 and boost the U.S. Dollar. The greenback has gained about a quarter percent against its major rivals in the 15 minutes after the data. 

EUR

After the dust settles following the U.S. employment data, focus will refocus on political developments in Europe. On Sunday, Italians will head to the polls to vote on a referendum on Prime Minister Matteo Renzi’s proposed reforms. Opinion polls from last week and beyond have consistently showed that a “no” vote is likely to prevail. Renzi has said he will resign if he fails to secure a “yes” outcome. The political uncertainty in Europe’s third largest economy has been weighing on the single currency much of the autumn. 

GBP

Despite slipping slightly yesterday, the British pound has enjoyed a strong run over the last three trading sessions. The sterling’s strength comes from renewed optimism that Britain will contribute funds to the EU in order to access the single market. Yesterday’s comments from Brexit Secretary David Davis were the first public acknowledgement that such an arrangement may be on the table. Expect the market to remain sensitive to Brexit-related headlines as the situation evolves.