The dollar rebounded on Friday after the publication of employment figures which satisfied operators on the state of the American economy, better positioned than most other developed countries. Around 7:45 p.m. GMT, the Dollar Index, which compares the greenback to a basket of six currencies, appreciated by 0.34%. THE «greenback»nickname of the currency of the United States, also gained 0.34% against the single currency, at dollar for one euro.
The American economy created 227,000 jobs in November, better than the 214,000 expected by economists. It thus rebounded after the 36,000 job creations in October, a month marked by disruptions linked to the passage of hurricanes Milton and Helene in the southeast of the United States. The unemployment rate rose slightly to 4.2%, compared to 4.1% previously, but remains at a level close to the lowest of the last fifty years. “This report clearly tells us that we are not entering a recession”commented Gina Bolvin, of Bolvin Wealth Management Group. “The labor market remains healthy and resilient.”
Towards a Fed rate cut?
Many economists have nevertheless noted signs of slowdown, notably the decline in the labor force participation rate of people of working age. Nationwide's Kathy Bostjancic estimated that the rebound from October was only “modest” and that job creation was mainly concentrated in sectors less sensitive to the economic situation. This table justifies, according to her, a new rate cut by the American central bank (Fed), at the end of its next meeting, on December 17 and 18. Operators now give a probability of 89% to this scenario, compared to only 71% on Thursday. This new monetary easing would theoretically be likely to weaken the dollar, which nevertheless regained ground on Friday. For Adam Button of ForexLive, operators nevertheless expect the Fed to slow down after this drop.
Given the state of the American economy, “it seems that the Fed does not need to go much further” in its cycle of monetary easing, according to the analyst, and is content with two additional strokes by the end of 2025. A trajectory which would contrast with that of most other major central banks, which the market expects to go much further, particularly in Europe. “The United States is the best destination for next year”argues Adam Button. “They have the strongest currency and economy” among the great nations.
