EUR/USD rallied today, though the rally was not nearly enough to erase yesterday’s slump caused by the dovish European Central Bank. The currency pair rallied as US nonfarm payrolls surprised markets, showing barely any growth of employment. Yet the rally was capped by other parts of the report. Both the unemployment rate and average hourly earnings improved and exceeded expectations. Furthermore, the housing report was also better than forecasts had promised.
Nonfarm payrolls were barely changed in February, rising by just meager 20k. That was complete shock to markets as the consensus forecast had promised an increase by at least 180k. The January’s already impressive increase got a slight positive revision from 304k to 311k. At the same time, unemployment rate fell from 4.0% to 3.8%, below the consensus of 3.9%. Average hourly earnings rose by 0.4%, exceeding market expectations of a 0.3% rise and the gain by 0.1% registered in the previous month. (Event A on the chart.)
Both housing starts and building permits increased in January, and both exceeded market expectations. Housing starts were at the seasonally adjusted annual rate of 1.23 million, up from 1.04 million in December. Building permits were at the seasonally adjusted annual rate of 1.35 million, up from 1.33 million in the previous month. The average forecast was at 1.19 million for housing starts and 1.29 million for building permits. (Event A on the chart.)
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