NFP shows long Dollar is still the game in town

Last Friday, NFP report showed US economy added fewer jobs in January. Just about 151,000, which is much lower than 190,000 expected and 262,000 in December. December got revised down by 30,000. All in all the headline, should have been perfect recipe for weakness in Dollar.

But after initial jolt and losing, Dollar turned out as big gainer for Friday.

It is the minute details in the report that played crucial role and proved that Dollar is still the only game in town.

• Unemployment edged lower to 4.9%, best reading since March 2008 and that came in the back of 0.1% gain in participation.
• Moreover, the report can be seen as saying, US economy still adding jobs, bringing unemployment lower and that is at higher wage growth. Wages grew 0.5% for January and up 2.5% from a year ago, which is the highest rate in five years.
• Moreover, the headline gains of 151,000 shouldn't be read too much as it could easily get revised upwards in next report.

Looking from this point, it really makes sense for Dollar strengthening. However, key would be inflation, which has still been lagging to some extent. But if wage growth do sustain, US consumers are going to have bigger purse thanks to combined effect of such and lower oil price.

Dollar index is currently trading at 97.13, up 0.07% today so far.