US Nonfarm Payrolls rose at a much slower pace than expected in November. However, an underwhelming print did little to undermine the USD. Economists at TD Securities think 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 (especially vs. funding currencies).”

“We expect 1.12/14 in EUR/USD, dips faded sub-113 in USD/JPY and USD/CAD fatigue in 1.28/29.”