Dollar unsurprised by NFP miss
Despite the dollar’s initial pullback after the NFP report came short of expectations, delivering 199k job additions versus the 400k projection, the dollar quickly pared its losses as the US unemployment figure fell to 3.9% against the 4.1% expectation. This employment report seems solid enough for the Fed to proceed with its plan to both lift interest rates and reduce the size of its balance sheet at the same time.
Commodity-linked currencies such as the kiwi and loonie are trading higher today, supported by the soaring oil prices, while the aussie is slightly down on the day. In addition, the stronger-than-expected Canadian employment report seems to be adding more fuel to the loonie’s rally.
On the other hand, the persistent rally in global yields continues to undermine the safe haven currencies, with the franc and yen losing ground in the current session.
The euro is also gaining traction today since both retail sales and inflation reports for the Eurozone positively surprised the markets. The latter report pointed out that annual inflation reached 5%, while core inflation was higher than 2% in December, reaffirming that price pressures are not abating yet and that the ECB might be forced to accelerate its rate hike timeline to counter inflationary pressures.
US stocks lose ground after the NFP report
Wall Street seems to be resuming yesterday’s downfall as the NFP report reinforced the Fed’s ultra-hawkish stance and significantly increased expectations for a rate hike in March 2022. E-mini futures for the major US indices are taking a hit in premarket trade as spiking yields seem to be unfavorable for stocks.
In individual stock news, Gamestop announced yesterday that it is launching a division to develop a marketplace for NFTs and establish cryptocurrency partnerships. Hence, with investors pricing in that news on today’s session, the stock is up 18% in pre-market trade.
Oil surges; gold stabilizes
Oil prices have climbed to a seven-week high as extremely harsh weather conditions in Canada and the northern US have been disrupting oil flows, boosting prices just as American stockpiles decrease. Moreover, riots in Kazakhstan and outages in Libya raised further concerns over the supply side.
Although geopolitical flare-ups have intensified globally, gold cannot manage to capitalize on them as soaring real yields negatively weigh on the precious metal.
Bitcoin and the broader cryptocurrency market continue to be a sea of red today after the ultra-hawkish FOMC meeting minutes cast a shadow over risky assets.
