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European Session – Dollar tumbles on dismal March nonfarm payrolls number

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USD2The European session was quiet as there were no Eurozone data releases due to nearly all of Europe being closed for the Good Friday holiday. Despite the holiday, the US Labor Department released the March nonfarm payrolls report as is normal on the first Friday of every month.

Last month’s number disappointed and missed forecasts for a gain of 245,000 jobs. Instead the US economy added the fewest jobs since December 2013. Nonfarm payrolls increased by the seasonally adjusted 126,000 jobs in March .This was the first time that the nonfarm payrolls number fell below 200,000 in 12 months and was down from February’s revised 264,000 jobs. This was revised down from 295,000.

Meanwhile, the unemployment rate remained unchanged from February at 5.5% as expected. This was the lowest in more than 6-1/2-years.

The only upside to the employment report was the average hourly wage rate which rose 0.3% in March to $24.86.

Today’s nonfarm payrolls data comes after a weak ADP private payrolls report on Wednesday, which showed that only 189,000 positions were added in March. This was well below the 225,000 jobs expected and followed from February’s 214,000 jobs gain.

The weak pace of growth in the US labour market may prompt the Federal Reserve to delay an anticipated interest rate hike until September. The central bank has not raised the key rates since 2006 and the key Fed funds rate remains close to zero.

The dollar tumbled against most major counterparts after the news today . After some quiet range-bound trading above 119.60 yen during the Asian and European sessions, the dollar dipped to 118.73. The euro surged to 1.1026. Earlier in the day a low of 1.0863 was reached. Sterling also rallied all the way up to 1.4944, moving off a low of 1.4809.

The next key risk event for the greenback will be the following week’s Fed minutes.

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