After yesterday’s unexpected interest rate cut by the European Central Bank, Forex traders experienced yet another surprise today, this time from the United States. Nonfarm payrolls grew much more than was expected. This was especially surprising considering that several previous releases trailed estimates and were rather disappointing to dollar bulls. The dollar surged on the news, while the euro sank. Together with yesterday’s GDP report, today’s employment data makes it much more likely for the Federal Reserve to tamper quantitative easing soon, perhaps even next month.
Nonfarm payrolls surged to 204k in October, much above the forecast value of 121k. The September reading was revised positively from 148k to 163k. At the same time, the unemployment rate ticked up by 0.1 percentage point to 7.3%. (Event A on the chart.)
Both personal income and spending rose in September and both missed the expected growth rate of 0.3%. Income increased 0.5% (with the same pace as in August) and spending edged up 0.2% after rising 0.3% in the prior month. (Event A on the chart.)
Preliminary reading of Michigan Sentiment Index was at 72.0 in November, down from 73.2 in October. Economists hoped for an increase to 74.6. (Event B on the chart.)
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