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US Dollar Falls Sharply as Non-Farm Payroll Disappoints

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Weak labor data

According to the Bureau Of Labor Statistics report released October 2, 2015, employment increased by only 142,000 jobs in September, well below expectations of more than 200,000. The mining industry experienced most of the fall, with mining and mining support activities seeing a decrease of 17,000 jobs. Healthcare was a major positive mover, adding 34,000 new jobs. The report also showed major downward revisions in July’s and August’s non-farm payroll numbers. Average month-over-month hourly earnings remained flat, despite expectations of a rise. The unemployment rate remained at 5.1% for September.

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US Dollar Index slips

The US Dollar Index fell sharply on October 2, 2015 on the back of weak domestic labor data. The index fell to a low of 95.22 before regaining some strength towards the end of day. Labor data is a major indicator looked at by the US Federal Reserve when deciding on the interest rate scenario. Weak labor data makes an interest rate increase less likely. The US Dollar Index fell by 0.37% intraday before closing at 95.83.

Impact on the market

The SPDR S&P Health Care Services ETF (XHS) traded positively on October 2, 2015, and ended the day 1.33% higher. The SPDR S&P Retail ETF (XRT), a retail sector fund, followed a similar trend and rose by 1.77% for the day.

Energy-related stocks rose on October 2, 2015, with Murphy Oil Corporation (MUR) and Devon Energy Corporation (DVN) rising by 9.56% and 7.87%, respectively. Also, Vertex Pharmaceuticals (VRTX) rose by 7.41%.

 

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