NFP

Traders and economists expect the NFP report to show that the US created 90K net new jobs, with average hourly earnings rising 0.3% m/m (3.1% y/y) and the U3 unemployment rate at 4.1% - see what the leading indicators are suggesting!

The trading week is getting underway and, for now, gold has struggled to maintain the strength that characterized its performance in previous weeks. Average price action over the last two sessions shows a decline of roughly 1.5%, reflecting a loss of momentum that has started to highlight a more neutral market environment.

The NFP arrives today with the odds of a rate hike from the Fed slipping back to around 50% and correspondingly the dollar sold off again yesterday. That was due to comments from Fed’s Waller who said next week’s CPI could determine whether he votes for a hike or hold. He was thus a lot less hawkish than the Fed Chair Kevin Warsh.

Speculation about yen intervention followed a sudden drop in dollar yen, yet the selling that came after was smooth and steady rather than sharp and disorderly. Markets now carry far more Bank of Japan tightening for this year than before the late July episode. A reverse carry trade sits behind it, alongside a dollar slipping against the euro, the Australian dollar, and gold.

The last two trading sessions have been particularly important for gold's price action in the short term. XAU/USD has gained more than 3.7% during this period, once again highlighting a meaningful bullish bias around the precious metal.

DXY has broken below the 200-day moving average as selling accelerates toward major support, raising the stakes ahead of Friday’s NFP report.

NFP leading indicators point to a potentially above-expected reading in this month’s jobs report, with headline job growth coming in somewhere in the 75-125K range, with a chance the report tips the scales on the FOMC interest rate decision later this month.

Today’s US jobs report was the first of the four major releases before the Fed’s next meeting in September. As it turned out, this was a pretty bad report and as a result, the odds of a September rate hike fell to around 44% from north of 55% before the data was released.

U.S. payrolls collapsed to just 57,000 in June, far short of forecasts, sending the dollar lower and reviving Japanese intervention speculation. Fawad Razaqzada, Market Analyst at FOREX.com breaks down what the miss means for the Federal Reserve and the dollar.

Ahead of today’s jobs data we had already seen some weakness in USD, driven by suspected Japanese intervention in the USD/JPY pair. The dollar had also eased after Kevin Warsh said inflation risks had eased. But he was also happy to let incoming data drive market expectations and keep policy debate for FOMC meetings. Thus, a lot was hinging on this US jobs report for market direction. Well, as it turned out, the data was disappointing, but not a gamer changer.

Today looks to be the most important of the week for much of the financial markets. The US dollar eased lower amid potential intervention by Japan, while US stock futures traded mixed with ahead of today’s closely watched non-farm payrolls report. Investors were reluctant to take on fresh risk before one of the month’s most important economic releases, and ahead of a long weekend for US investors.

A bullish wedge keeps upside in focus, but markets may be more sensitive to weak US labour market data than another upside payrolls surprise.