Article by AlgosysFx Forex Trading Solutions
With the September Non-Farm Payrolls report providing the markets optimism that the US economy is on a steady mend, the US dollar is foreseen to outclass the Swiss franc today. Although hiring remained at a rather tepid pace, the Unemployment Rate unexpectedly dropped to a near four-year low during the month, potentially boosting President Barack Obama’s reelection bid.
The US Labor Department reported that the Jobless Rate fell from 8.1 percent to 7.8 percent last month, its lowest level since January 2009, even as more Americans joined the hunt for work. Employers added 114,000 positions to their payrolls last month, still a number seen too weak to incite substantial improvement in the labor market. Nonetheless, the Labor Department also said that a combined 86,000 more jobs were created in July and August than previously estimated, indicating that the economy generated 146,000 jobs per month in Q3 compared to the 67,000 average in the second quarter. The gains were led by the health care industry, which added a seven-month high of 44,000 jobs. Transportation and warehousing also showed considerable gains during the month.
Average Hourly Earnings also exceeded forecasts and rose by 0.3 percent in September to record its largest increase since June, suggesting that consumer spending could incline amid improved confidence. Taken together, economists deem that the report suggested a healthier labor market as the employment-to-population ratio increased to its highest level since May 2010. The jobs market has been steadily improving, with jobs having been added for 24 consecutive months. The report could also give Obama a chance to point to an improving economy after stumbling in this week’s debate against Republican adversary Mitt Romney.
Last month, linger poor labor market conditions spurred the Federal Reserve to announce a third round of monetary stimulus which plans to buy $40 Billion worth of mortgage-backed securities each month until it sees a sustained turnaround in employment. Although the September report is unlikely to incite the Fed to back off its stimulus soon, the apparent improvement in the jobs sector is certainly welcome news for the Fed, likely forcing it to reduce the duration of QE3. On optimism for the world’s largest economy, a long position in favor of the Greenback for the USD/CHF is advised today.
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