Forexlive Americas FX news wrap: Record jump in NFP jobs

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Forex news for NY trading on July 2, 2020.

Markets:

  • Spot gold up $5.94 or 0.34% at $1776.06. The high price reached $1779.71. The low price extended to $1757.77
  • WTI crude oil futures are trading up $0.41 or 1.03% of $40.22. The high price reached $40.74 into the futures settlement. The low price extended down to $39.46.

I know it’s Thursday and typically US employment reports are released on Friday, but given the July 4 observance holiday on Friday, the job numbers were released a day earlier. They did not disappoint with 

  • nonfarm payroll jobs rising by 4800K. The estimate was for 3230K.  The number was good enough for a record month-on-month change
  • The prior month’s revisions totaled +90 K. 
  • The unemployment rate was also better than expectations and 11.1% vs. 12.5% estimate. Last month it came in at 13.3%. 
  • Manufacturing jobs increase by 356K which was worse than the 425K estimate
  • The average weekly hours dipped to 34.5 from 34.7 last month. 
  • Average hourly earnings month-to-month fell by -1.2%, which was worse than the estimate of -0.8%. 
  • The labor force participation rate increased to 61.5% from 60.8% last month. 

That’s the good news. The not so good news is that despite the 4.8 million new jobs, since February the change in nonfarm payroll is still down -14.75 million. and the unemployment rate is still well above the 10% level. The total number of workers unemployed are still at 17.8 million.

The stock market – in particular the Nasdaq index – may have a V-recovery, but the employment situation is still quite tenuous. It will be a while before the job situation in the US mirrors or gets even close to the early 2020 year levels (if ever).

In the forex, the NZD was the strongest currency coming into the day, and remained the strongest at the end of the day. However the gains were tempered in the New York session.  The EUR and GBP for the weakest currencies. The USD is ending the session mixed with a decline of -0.54% vs. the NZD, but modest gains or losses (+/- 0.13 or less) vs. the rest of the major currency pairs.  

Below are the rankings of the major currencies vs each other. The biggest changes more against the NZD for all the major currencies.  

In the US debt market today, yields are ending the session mixed with the 5 year down the most at -1.6 basis points. The 30 year is ending the session higher by 0.4 basis points. Yields did initially move higher with the 30 year up around 5.0 basis points at its peak in the 10 year up about 3.4 basis points (it is trading at -0.7 basis points currently).

Are ending mixed

In the US stock market, although the major indices are ending higher on the day with the NASDAQ index making a new all-time intraday high and closing at a record high for the 2nd consecutive day, the indices are closing near session lows. It is the market running out of steam?  It seems so. Nevertheless, traders will have to wait until the long weekend is over on Monday to gauge the “day-after” impact following the better-than-expected jobs report.  

US stocks close near lows Some technical levels in the major currency pairs to eye in the new trading day:

EURUSD: The EURUSD had an up and down day with the pair rising in the London morning session to test 1.1300 (the hi reached 1.1302) and falling in the New York session. The price initially stalled the decline at its 200 hour moving average (currently at 1.13499). Yesterday and today in the Asian session, the price found support buyers against that 200 hour moving average. When the level was broken, sellers push the price down toward the 1.12188 level before rebounding back toward its 100 hour moving average at 1.12404. In the new day the 100 hour moving average and 200 hour moving averages will help define the bias. Stay below and the bears remain in control.

GBPUSD: Yesterday, the GBPUSD moved back above its 100 day moving average (currently at 1.24579) in the New York afternoon session and stayed above that level in the early Asian session. Holding support helped to push the price back up toward the 50% retracement of the move down from the June 10 swing high.  That low came in at 1.25313. The high price for the day reached just below that level at 1.2529.  Post employment, the price move back down to retest its 100 day moving average. Although the price peek below the line on two hourly bars, no momentum could be developed in the slow afternoon trading. In the new day the 100 day moving average will continue to be the barometer for both the bulls and the bears. Stay above is more bullish, but a break below should solicit more selling.

I will be off in observance of the US Independence Day tomorrow (and quarantining in Arizona with my family), but wish good fortune to all. Have a good and safe weekend.

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