US Employment Data that rocked the US Dollar

The fragile US recovery started showing some cracks last week as the lower than expected jobs data for March Non Farm Payrolls was released at 120k new jobs, verses an expected 210k. Whilst this was disappointing, it wasn't too surprising however the USD did take a hit, bringing talk of quantitative easing (QE), not just from the US Federal Reserve(Fed) but also the Bank of Japan.

Did Warmer Winter Adjusting Job Seasons?

Many reasons for this lower than expected employment have been put forward. Trading Quarter FX strategist John J Hardy commented on Tradingfloor 'There are two ways to spin this as usual: the report is bad because March was still unseasonably warm and should have resulted in strong payrolls growth – or, the report is actually ok, because the even more unseasonably warm weather in January and February robbed March of its potential for maintaining strong jobs growth and this was just a little mean reversion.' So could this mean that this is merely a speed bump in the US recovery?

Campaign Weapons for US Elections

The shape of the US recovery will undoubtedly now be put back under the microscope, especially in light of it being an election year, the Obama camp planning a defence strategy from the coming onslaught from the presidential candidates. All the small cracks in the recovery will be examined and discussed, and used as political campaign weapons, from the surging oil prices to the US's exposure to the European crisis.

Feedback from the Fed

The Boston Globe recently reported that Bernanke had advised of 'New finanical risks', and the exposure to the Eurozone Crisis. With the Fed is still working to address the regulatory failures from the 2008 financial crisis, it makes many of us wonder how it can take nearly 4 years to figure out a solution to restoring a secure financial system. From an economic perspective, it can only dampen the confidence in a full recovery.
A small consolation was with crude oil futures reporting a seven week low as reported by Market Watch. But uncertainty still lingers with this market moving commodity, as the tension from Iran continues.

US Economic Indicators ahead

In talking to my colleague Matti Williamson next week's figures will be interesting such as retail figures, Retail Sales (Monday), and existing home sales (Thurs). This is a good indication of how much confidence people have in the economy, measured by how many homes are bought and sold, and how much people are spending in the retail environment. This should give us all a better indication of the size of the speed bump in the US economy, and the strength of the USD.