EUR/USD rallies to 23-month highs as NFP misses forecasts

The euro soared to its highest level in 23 months against the US dollar on Tuesday, after a report showed that US private sector added fewer than anticipated jobs in September, fueling speculations that the Federal Reserve might be urged to postpone its stimulus scale back.

EUR/USD rose sharply to a session high at 1.3748 at 12:30 GMT, also the pairs highest point since November 2011, after which consolidation followed at 1.3743, advancing 0.46% for the day. Support for the cross was likely to be received at current session low, 1.3652, while resistance was to be encountered at November 14th high, 1.3788.

The US Department of Labor reported earlier today, that employers in the country added fewer than projected job positions in the month of September, which suggested that new hiring slowed down. The private sector added 148 000 jobs in September, below preliminary estimates of 180 000 positions, and following the revised 193 000 new jobs in August up from 169 000 previously.

At the same time, the rate of unemployment in the United States decreased to 7.2% in September, marking its lowest level since November 2008, from 7.3% a month ago.

Last but not least, the average hourly earnings increased 0.1% in September on a monthly basis, following the revised up 0.3% gain a month ago, while analysts had expected a 0.2% increase in September.

“This should confirm a smooth-sailing market mentality that is friendly for carry trades, negative for the dollar and positive for equities,” said Brad Bechtel, managing director at Faros Trading LLC in Stamford, Connecticut, cited by Bloomberg. “This is obviously a low print relative to expectations.”

Following the above mentioned weaker than expected data points, the Federal Reserve Bank will probably delay the first reduction of its asset purchases until March 2014, according to the median estimate of 40 experts in a survey by Bloomberg News. Poll’s results in September pointed that the first cut of stimulus would occur in December. Analysts revised their projections after the partial government shutdown in the United States, which may have shaved nations economic growth by 0.3% during the final quarter of the year.

The US government started its work on October 17th, after an agreement, reached in the last minute, delayed fiscal deadlines until early next year. The deal provided government funding through January 15th and also extended the nation’s debt ceiling to February 7th from October 17th, which avoided a potential default on countrys obligations.

Meanwhile, the euro was gaining against the sterling, with EUR/GBP cross up 0.27% on a daily basis to trade at 0.8497 at 14:08 GMT. The pound demonstrated a slight reaction, following a report released earlier on Tuesday, which said that the public sector deficit of the United Kingdom shrank to 11.1 billion GBP in September, from a deficit of 12.1 billion GBP recorded in September 2012. EUR/JPY pair rallied 0.86% today to trade at 135.51 at 14:13 GMT.