NFP: Dollar drops, stocks higher, gold soars, as rate cut bets increase
Fiona Cincotta June 7, 2019 4:28 PM
The weaker than forecast NFP figures added to speculation that the Federal Reserve will cut rates giving equities a injection of life.
European markets were already on a front foot owing to optimism that progress was being made in the trade and immigration talks between US and Mexico. The weaker than forecast NFP figures added to speculation that the Federal Reserve will cut rates giving equities a further injection of life.
Wages lower than expected
With unemployment remaining at 3.6%, we might be tempted to think that headline job creation is weaker due to full employment, however wage growth doesn’t support this story. In the case the full employment we would expect wages to move higher as well. As this isn’t happening the cause for lower job creation appears to be something else, something a little more sinister. Wages disappointed, increasing 0.2%, lower than the 0.3% expected.
Dollar dives 2.5 month low
The market’s reaction is that of a market which is expecting a rate cut imminently. The CME Fed Fund shows the market is now pricing in a 79% probability of a rate hike by July and a 97% probability of a rate rise by September. The dollar dropped to 96.5 versus a basket of currencies, its lowest level in 2 ½ months.
Whilst the start of next week is relatively quiet as far as US economic data is concerned, it picks up in the second half with inflation, retail sales, industrial production and consumer confidence. Any sign of weakness could see the dollar drop toward support at 95.75.
Disclaimer: The information on this web site is not targeted at the general public of any particular country. It is not intended for distribution to residents in any country where such distribution or use would contravene any local law or regulatory requirement. The information and opinions in this report are for general information use only and are not intended as an offer or solicitation with respect to the purchase or sale of any currency or CFD contract. All opinions and information contained in this report are subject to change without notice. This report has been prepared without regard to the specific investment objectives, financial situation and needs of any particular recipient. Any references to historical price movements or levels is informational based on our analysis and we do not represent or warranty that any such movements or levels are likely to reoccur in the future. While the information contained herein was obtained from sources believed to be reliable, author does not guarantee its accuracy or completeness, nor does author assume any liability for any direct, indirect or consequential loss that may result from the reliance by any person upon any such information or opinions.
Futures, Options on Futures, Foreign Exchange and other leveraged products involves significant risk of loss and is not suitable for all investors. Losses can exceed your deposits. Increasing leverage increases risk. Spot Gold and Silver contracts are not subject to regulation under the U.S. Commodity Exchange Act. Contracts for Difference (CFDs) are not available for US residents. Before deciding to trade forex and commodity futures, you should carefully consider your financial objectives, level of experience and risk appetite. Any opinions, news, research, analyses, prices or other information contained herein is intended as general information about the subject matter covered and is provided with the understanding that we do not provide any investment, legal, or tax advice. You should consult with appropriate counsel or other advisors on all investment, legal, or tax matters. References to Forex.com or GAIN Capital refer to GAIN Capital Holdings Inc. and its subsidiaries. Please read Characteristics and Risks of Standardized Options.