NFP Quick Analysis: Buy the dollar dip? Healthy jobs growth to keep Fed on tapering track


  • The US gained 850,000 jobs in June, better than expected.
  • Upbeat figures seem to be in Goldilocks territory, allowing the dollar to fall.
  • The dollar has room to rise once the dust settles, as the Fed remains on course. 

Is the lack of a presidential press conference a sign of strong jobs numbers? In the past two Nonfarm Payrolls reports, the White House pre-scheduled public appearance by President Joe Biden. Both figures missed. This time, the NFP beat estimates with 850K in June

A third consecutive Nonfarm Payrolls disappointment was avoided – but the beat was not huge, revisions were minimal and a downside dollar correction was overdue. That explains the knee-jerk reaction of selling the dollar. It is also essential to remember that these greenback gains were fueled by the Federal Reserve, which based its policy on a better labor outlook, not an outcome.

Time to make big changes? Not so fast. Returning to normal is not like clicking the Undo button – finding workers with adequate skills and with matching salary expectations is far from easy. Nevertheless, the figures still point to rapid growth and that should encourage markets and the Fed.

Officials at the world's most powerful central bank will be responding to the NFP in the coming days and are unlikely to alter their views. The already growing chorus of officials calling for printing fewer dollars will likely continue voicing these views. Market participants are circling late August's Jackson Hole Symposium as the timing of a tapering announcement. 

Moreover, wage growth remains upbeat at 3.6% YoY, and when people have more money in their pockets, it will likely exit these pockets and push prices higher. The Fed's second mandate is price stability and any such increase in salaries may convince the bank to abandon its theory that inflation is transitory. Higher pay means persistent price rises. 

 

 

 

Information on these pages contains forward-looking statements that involve risks and uncertainties. Markets and instruments profiled on this page are for informational purposes only and should not in any way come across as a recommendation to buy or sell in these assets. You should do your own thorough research before making any investment decisions. FXStreet does not in any way guarantee that this information is free from mistakes, errors, or material misstatements. It also does not guarantee that this information is of a timely nature. Investing in Open Markets involves a great deal of risk, including the loss of all or a portion of your investment, as well as emotional distress. All risks, losses and costs associated with investing, including total loss of principal, are your responsibility. The views and opinions expressed in this article are those of the authors and do not necessarily reflect the official policy or position of FXStreet nor its advertisers. The author will not be held responsible for information that is found at the end of links posted on this page.

If not otherwise explicitly mentioned in the body of the article, at the time of writing, the author has no position in any stock mentioned in this article and no business relationship with any company mentioned. The author has not received compensation for writing this article, other than from FXStreet.

FXStreet and the author do not provide personalized recommendations. The author makes no representations as to the accuracy, completeness, or suitability of this information. FXStreet and the author will not be liable for any errors, omissions or any losses, injuries or damages arising from this information and its display or use. Errors and omissions excepted.

The author and FXStreet are not registered investment advisors and nothing in this article is intended to be investment advice.

Recommended Content


Recommended Content

Editors’ Picks

EUR/USD remains pressured below 1.0800, US data eyed

EUR/USD remains pressured below 1.0800, US data eyed

EUR/USD is trading under pressure below 1.0800 in European trading on Friday. A renewed US Dollar uptick and a cautious mood weigh on the pair, as traders digest the Trump win and the Fed rate cut ahead of the US preliminary Consumer Sentiment data for November.

EUR/USD News
GBP/USD holds lower ground near 1.2950 amid tepid risk sentiment

GBP/USD holds lower ground near 1.2950 amid tepid risk sentiment

GBP/USD edges lower toward 1.2950 in the early European session on Friday. The emergence of dip-buying in the US Dollar and a tepid risk tone undermine the pair. The BoE’s cautious rate cut could check the pair's downside, as traders look to BoE-speak, US data for fresh incentives. 

GBP/USD News
Gold appears stuck between key technical levels, what’s next?

Gold appears stuck between key technical levels, what’s next?

Gold price has returned to the red early Thursday after reversing more than half of the Trump win-led 3% slide on Wednesday. Gold sellers fight back control, as the US Dollar finds its feet amid a pause in the US Treasury bond yields sell-off while awaiting the Michigan preliminary Consumer Sentiment data.

Gold News
Bitcoin touches new all-time high near $77,000 following Fed rate cut

Bitcoin touches new all-time high near $77,000 following Fed rate cut

Bitcoin price rallied and reached a new all-time high of $76,849 following the US Federal Reserve’s 25 basis point rate cut. Ethereum and Ripple followed suit and closed above their key resistance levels, hinting at a possible rally ahead.

Read more
Outlook for the markets under Trump 2.0

Outlook for the markets under Trump 2.0

On November 5, the United States held presidential elections. Republican and former president Donald Trump won the elections surprisingly clearly. The Electoral College, which in fact elects the president, will meet on December 17, while the inauguration is scheduled for January 20, 2025.

Read more
Best Forex Brokers with Low Spreads

Best Forex Brokers with Low Spreads

VERIFIED Low spreads are crucial for reducing trading costs. Explore top Forex brokers offering competitive spreads and high leverage. Compare options for EUR/USD, GBP/USD, USD/JPY, and Gold.

Read More

Majors

Cryptocurrencies

Signatures