USD Remains Resilient Despite Disappointing NFP

US Nonfarm Payrolls rose at a much slower pace than expected in November. However, an underwhelming print did little to undermine the USD.

It will be very difficult to sell the USD as a thematic strategy given the global monetary policy setup. Fed’s hawkishness to be a significant offset to a USD retreat

Payrolls were +210K, well below expectations, and revisions added a relatively modest 82K. Hourly earnings were also not as strong as expected: +0.3% MoM and 4.8% YoY. In contrast, the household survey data were extremely strong, with unemployment down 0.4pt to 4.2%, even with a 0.2pt rise in the participation rate.

With a hawkish Fed profile in place (faster taper and likely hawkish SEP forecasts), USD dips should be shallow particularly versus funding currencies.