US Dollar clings to last week's recovery gains on the back of the impressive January jobs report on Friday. Economists at Commerzbank expect the greenback to remain on a solid foot.

Gleanings from the US labour market report

“Instead of the 200K jobs created expected by analysts it turned out to be approx. 500K, instead of a rise in the unemployment rate to 3.6% we saw a fall to 3.4%. Combined with the recent rise in the number of job vacancies this provides an image of a US labor market that is heavily overheating.”

“So far – let us not delude ourselves – a considerable part of the USD valuation was based on the fact that in the US capital was particularly profitable thanks to a labor force that did not even dream of maternity laws, sick or holiday pay. If this were to change due to a long-term shortage of labor, part of the attractiveness of USD would be lost. However, these are medium- to long-term considerations.” 

“For now, the USD bulls are happy about the prospect that the Fed will hardly have to consider the real-economic consequences of a more restrictive monetary policy in view of such a strong labor market. And that means: there is a prospect of higher USD carry than previously assumed.”