DailyFX Instant Insight:By Kathy Lien and Boris Schlossberg, Currency Strategists..Going into the payrolls report, the US dollar rallied, but pre-release gains were not extended despite… … the stronger than expected headline number.

Payrolls increased 211k vs. 190k expected in the month of March. Jobs created in the month of Feb were
also downwardly revised from 243k to 225k, tempering optimism. Even though the
unemployment rate improved to 4.7 percent, the internals of the report offered a
mixed picture. Manufacturing sector, the sore point of the US economy continued to
see contraction with 5,000 jobs lost last month and the Feb figure was downwardly
revised from -1k to -10k. Additionally, wage gains were modest at best with average
hourly earnings growth slowing from an upwardly revised 0.4 percent to 0.2 percent
in March. Average weekly hours remained unchanged at 33.8.

Overall, the report gives neither bulls nor bears a clear advantage. The dollar
really needed a resoundingly strong report to reverse its recent weakness. At this
point, the market is likely to consolidate and look to next week's trade balance and
retail sales data to determine the direction of the pair for the near term. The US
economy hinges on strong consumer spending and if it fails to deliver, the Euro
could head right back to its year to date highs.

Kindest Regards,

Kathy Lien
Chief Strategist
Forex Capital Markets LLC
32 Old Slip, 10th Floor
New York, NY 10004
Tel (212) 897-7660
Fax (212) 897-7669
E-mail: klien@fxcm.com

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