EUR/USD edges higher after disappointing US nonfarm payroll employment

EUR/USD edged up on Friday after disappointing employment statistics from the United States. According to the US nonfarm payroll employment data released by the Bureau of Labor Statistics, employment increased in March by 88,000, significantly below economists' forecast of 190,000 from a Bloomberg survey, with unemployment slightly lower at 7.6 percent (previously 7.7 percent). This suggests that employers hired fewer workers in March than previously thought, and this fact is all the more disappointing when considering that unemployment only decreased statistically due to 496,000 people dropping out of the workforce, bringing the participation to its lowest level since 1979. On the other hand, it should be mentioned that the numbers for January and February were revised up: Apparently, 148,000 new jobs were added in January (instead of only 119,000) and 268,000 jobs were created in February (50,000 more than previously estimated).

Still, last month's numbers raise fresh concerns about the dynamics of the US labour market and the real growth of the country's economy. After all, this was the lowest growth rate of jobs in nine months. Looking ahead, this does not paint an optimistic picture, with US austerity slowly beginning to kick in (overall, 7,000 jobs were cut in the government sector in March) and the Fed having to reduce its bond purchases eventually. The markets were quick to react to the bad news: While stocks suffered, money went into US Treasuries. The dollar is currently trading at $1.30155 against the euro, roughly 200 pips above Wednesday's levels, helping the euro to end the week on a bullish note -- although I doubt this to be much desired by the euro area, which is in need of a weak euro to fuel its ailing economy, as hinted at during yesterday's ECB press conference.