A strong rebound of USD following positive US employment data

Friday, February 06, 2015

US equity markets edged higher in early trade today, following positive US employment data. The Dow Jones index and the S&P 500 gained 0.25% and 0.5%, respectively, at the time of writing, while the US dollar index surged above 94.5.

The USD index rallied above 94.5

DXY Curncy (DOLLAR INDEX SPOT)   2015-02-06 16-37-20

The US economy added 257,000 jobs in January compared to 252,000 in December, beating analysts’ expectations. Private jobs surged 267,000 and average hourly earnings climbed 0.5% m/m in January compared to a decline of 0.2% in December. However, the unemployment rate increased to 5.7% in January versus estimates of 5.6%. The US dollar rallied strongly following the news, but the euro came under renewed pressure trading around 1.13 as uncertainty about Greek debt issues continue to dominate the markets.

EUR plunged towards 1.13

EURUSD Curncy (EUR-USD X-RATE)  2015-02-06 16-35-09

European equities extended losses in today’s session with the DAX, CAC and London equity benchmark index retreating between 0.17% and 0.5%. German industrial production increased slightly by 0.1% in December, missing analysts’ expectations of a 0.4% rise.

It has been a volatile but robust week for the oil market as WTI front month futures surged above $51 per barrel, while Brent front month futures rallied over 2% trading above $57.50 per barrel. Crude oil prices are in the process of trying to stabilise following the sharp sell-off in the last seven months. In London, energy stocks remained under pressure as BG Group, Royal Dutch Shell and Tullow Oil plunged between 1.1% and 2.1%.

The uncertainty in the Eurozone continues to dominate the markets, causing high volatility in the European equity markets and the Euro. The main focus will turn to the upcoming extraordinary meeting of the Eurogroup on Wednesday 11th February, as leaders and market participants are keen on a resolution of the Greek debt issues.

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