Dollar Holds Ground as Markets Brace for Fed's December Rate Decision
The US non-farm payrolls added 227,000 jobs last month, surpassing expectations. Additionally, the previous reading was revised up from 12,000 jobs to 36,000 jobs. Meanwhile, the unemployment rate rose to 4.2%. Most job additions occurred in the healthcare sector (+54,000), leisure and hospitality sector (+53,000), and government sector (+33,000).
chart illustrating the trend of non-farm payroll additions from January 2022 to December 2024.
chart showing the trajectory of the US unemployment rate since 2021.
Wage Data: Wages rose by 0.4% month-on-month in November, and by 4% year-on-year, exceeding expectations by 0.1%.
Implications on Interest Rates: Despite the stronger-than-expected job additions, the rise in the unemployment rate, coupled with a decline in the labor force participation rate, weighed on the outlook. Full-time employment dropped by 111,000 jobs, while part-time positions fell by 268,000. These factors bolstered expectations of a 25-basis-point rate cut at the Federal Reserve's December 18 meeting, with the probability of a cut standing at 88% at the time of writing.
USD Performance: The US dollar closed positively on Friday at 105.97, rebounding from its intraday low of 105.42, supported by robust employment data. However, market expectations for a rate cut on December 18 remain unchanged. From a technical perspective, the dollar remains bullish in the medium term as long as it trades above the 200-period moving average on the 4-hour chart. This outlook persists unless the dollar closes below the 105.00 support level. A breakout above the 106.70 resistance level could further bolster bullish momentum.
Gold Market Analysis: Gold is trading within a downward price channel on the hourly timeframe. It is expected to trade between $2,656 and $2,613 per ounce. A break below $2,610 could trigger further selling pressure, potentially targeting the $2,550 level.
