Non-farm payroll: Pound falls against the dollar after US job openings beat expectations (GBPUSD)
The dollar rocketed in lunchtime trading in the UK after official data showed the number of job openings in the US rose above expectations last month, following a disappointing showing in December.
The closely-watched non-farm payroll figure came in at 200,000 in January, while last month’s figure was revised up from 148,000 to 160,000. Economists had expected 180,000 new jobs.
The unemployment rate stuck at 4.1 per cent for yet another month, while average hourly earnings rose from 2.5 per cent to 2.9 per cent – a surprise jump compared with expectations of 2.6 per cent.
The news caused the dollar to shoot up against sterling, rising 0.7 per cent to £0.7057, while it rose 0.3 per cent against the euro, to €0.8020.
“While criticism of Donald Trump’s embattled White House continues to mount, job growth continues to go through the gears, with the latest nonfarm payroll figures proving job creation remains a competence within the president’s capabilities,” said Dennis de Jong, managing director at UFX.
“Buoyant domestic and global demand, particularly for the manufacturing sector, appear the drivers in higher-than-anticipated numbers, and Trump’s fiscal stimulus package is clearly a shot in the arm for economic growth.
“However, with the economy close to full employment, increased pressure on wages looks an inevitable consequence. So higher inflation is surely on the cards, with taller interest rates set to arrive over the coming months.”
Yellen bows out
The news followed the final meeting of the rate-setting Federal Open Markets Committee (FOMC) by Fed chair Janet Yellen, in which the group highlighted the risks of increased inflation pressures.
“Inflation on a 12‑month basis is expected to move up this year and to stabilise around the committee’s two per cent objective over the medium term,” the FOMC statement read.
“Near-term risks to the economic outlook appear roughly balanced, but the committee is monitoring inflation developments closely.”
Read more: US Fed holds rates but highlights increased inflationary pressures