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U.S. Labor Market Still Favors Fed Tapering

By MaiMarFX (Marios Krausse)ForexOct 11, 2021 04:30AM ET
U.S. Labor Market Still Favors Fed Tapering
By MaiMarFX (Marios Krausse)   |  Oct 11, 2021 04:30AM ET
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The US dollar weakened in an initial response to the non-farm payrolls miss last Friday. While a strong US job report was expected, the job growth in September turned out to be the slowest this year. 

With only 194,000 jobs added last month, the unemployment rate fell to 4.8 percent, and rising wage growth prevented the greenback from a steeper decline. 

However, the lower unemployment rate can be attributed to the decline in the size of the overall labor force. Average hourly earnings showed the most substantial advance since April, highlighting companies’ attempts to attract workers by offering higher wages.

Despite the weird labor market picture that simultaneously shows signs of weakness and overheating, the Federal Reserve is expected to tap into bond purchases. 

The British pound stabilized above 1.36 as the likelihood of a December rate hike by the Bank of England increases. Latest remarks from Bank of England (BoE) officials suggest that the market should brace for a “significantly earlier” rate increase than previously thought to curb inflation.

Technical Outlook

GBP/USD: If the cable climbs again above 1.3660, we pencil in higher price targets at 1.3750 and 1.38. On the downside, we would wait for a renewed fall below 1.3540 to expect a test of 1.34.

EUR/USD: Chances could shift in favor of the bulls, provided the 1.16-hurdle can be taken out. A sustained break above 1.16 would shift our focus to a higher target at 1.1670, followed by 1.1750. However, if 1.16 remains a resistance, we see a lower support zone between 1.1430-1.14. 

This week, all eyes will be on the September US CPI print on Wednesday. Elevated price pressures may underline that Fed tapering is just around the corner.

Disclaimer: All trading ideas and expressions of opinion made in the articles are the personal opinion and assumption of MaiMarFX traders. They are not meant to be a solicitation or recommendation to buy or sell a specific financial instrument.

U.S. Labor Market Still Favors Fed Tapering

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U.S. Labor Market Still Favors Fed Tapering

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Murithi Mwangi
Murithi Mwangi Oct 11, 2021 2:51PM ET
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I don't understand anything here
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