US Dollar sinks after Nonfarm Payrolls print is falling within the estimated range and disappoints markets

• The US Dollar turns softer and dips after Nonfarm Payrolls number comes in at the consensus range.  
• Traders are selling the Greenback with the odds for a rate cut in December not coming live again. 
• The US Dollar Index (DXY) falls further into the 105.00 region and snaps 105.53 pivotal support. 

The US Dollar (USD) is nosediving on the back of the 227,000 print in the Nonfarm Payrolls numbers. That 227,000 is firmly in line of estimates that ranged from 135,000 on the downside to 252,000 on the upside. The fact that the number did break above the highest estimate just ahead of always intensive holiday and shopping season, is seen as in issue. Already earlier this week alarm bells were going off when the Institute for Supply Management (ISM) saw the employment component come in softer than expected for the Services and Manufacturing sector. 

 Friday will end with the University of Michigan preliminary Consumer Sentiment Index reading and with four Federal Reserve officials making appearances. The focus will start to shift next week to the Fed rate desicion. That makes comments from Fed officials near to the event of December 18th a very good guide if a rate cut is to be expected. 

Daily digest market movers: In line is disappointing

• The US Jobs Report for November has been released:
  • The Nonfarm Payrolls print came in at 227,000 against the previous 12,000 increase. The estimates ranged from 135,000 on the downside to 252,000 on the upside. 
  • The Unemployment Rate ticked up to 4.2% from 4.1%.
  • The Monthly Average Hourly Earnings number came in at 0.4%, above the expected 0.3%, steady from the previous 0.4%.
• At 15:00 GMT, the University of Michigan will deliver its preliminary reading for December:
  • Consumer Sentiment is expected to tick up to 73 from 71.8 previously. 
  • The 5-year inflation expectations rate has no consensus view and stood at 3.2% in November. 
• A slew of Fed speakers will take the stage:
  • Near 14:15 GMT, comments are expected from Federal Reserve Governor Michelle Bowman, who participates in a virtual conversation at the Missouri Bankers Association Executive Management Conference.
  • At 15:30 GMT, Federal Reserve Bank of Chicago President Austan Goolsbee participates in a fireside chat at the 38th Economic Outlook Symposium organized by the Chicago Fed.
  • Around 17:00 GMT, comments are expected from Federal Reserve Bank of Cleveland President Beth Hammack who delivers remarks about the US economic outlook at an event organized by the City Club of Cleveland.
  • Federal Reserve Bank of San Francisco President Mary Daly will be the last Fed speaker this Friday at 18:00 GMT, participating in a moderated conversation and Q&A session at an event hosted by Stanford University’s Hoover Institution.
• Equities are happy with the Nonfarm Payrolls print and are opening the door for a rate cut in December by going higher. Both European indices and US equities are ticking up towards the US Opening Bell. 
• The CME FedWatch Tool is pricing in another 25 basis points (bps) rate cut by the Fed at the December 18 meeting by 70.1%. A 29.9% chance is for rates to remain unchanged. The Fed Minutes and recent comments from several Fed officials have helped the rate cut odds for December to move higher. 
• The US 10-year benchmark rate trades at 4.16%, on the downside in this week’s range between 4.16% and 4.28%.

US Dollar Index Technical Analysis: Hiccup into December

The US Dollar Index (DXY) is back to where it was roughly one month ago after retreating since it tried to topple the 108.00 level. The risk with the Nonfarm Payrolls print is that, if the number is far below estimates, the DXY could fall back all the way to pre-election levels at 104.25. 

On the upside, 106.52 (April 16 high) is apparently a hard nut to crack as a first resistance after failing to close above it this week after several attempts. Should the US Dollar bulls reclaim that level, 107.00 (round level) and 107.35 (October 3, 2023, high) are back on target for a retest. 

Looking down,  the pivotal level at 105.53 (April 11 high) comes into play before heading into the 104-region. Should the DXY fall all the way towards 104.00, the big figure and the 200-day Simple Moving Average at 104.03 should catch any falling knife formation. 

US Dollar Index: Daily Chart