Categories: Market Overview

NFP Comment: no more upside surprises

The US economy created 206k new jobs in June, slightly better than average expectations. However, May’s gain was downgraded from 272k to 206k, and April’s from 165k to 108k. The combined 123k downgrade of the previous two months’ estimates suggests a noticeably tighter labour market picture than previously imagined.

Unemployment reached 4.1% – the highest since November 2021 – up smoothly from 3.4% in April last year. Earlier, signs of a reversal were seen in the weekly benefit claims data, which also saw a multi-month upward trend.

It is only a matter of a month or two before we see a drop in US employment, which will be an important catalyst for kicking off the rate cut cycle.

At the same time, the pace of wage growth (4.1% y/y) does not suggest elevated wage growth. Still, high inflation expectations are unlikely to allow the Fed to act quickly and decisively enough to prevent a recession in the second half of the year.

The current report is moderately negative for the USD and potentially reverses its appreciation trend since the beginning of the year. At the same time, it is short-term positive news for the stock market, as it could lead to a reassessment of expectations. But we are wary of such growth based on negativity. Sooner or later (and this moment is impossible to guess), the negativity from a slowing or shrinking economy outweighs the optimism from interest rate expectations.

The FxPro Analyst Team

AddThis Website Tools
The FxPro Analyst Team

Our team consists of financial market experts. Our dedicated professionals prepare reviews on the foreign exchange market situation, Crude Oil, Gold and Stock Indices. All the analysts are regularly published in the world leading economic media.

Share
Published by
The FxPro Analyst Team

Recent Posts

Video: Dollar and Indices are trying to find footing after the fall

The dollar experienced a sell-off but rallied back up by the end of the week.…

2 days ago

What is next: BoJ, Fed, SNB & BoE Rates

The new week will be packed with economic data and decisions from key central banks.…

2 days ago

Dollar attempts to rebound after oversold conditions

Despite economic factors working against the dollar, its oversold condition helped it this week or…

2 days ago

USDCAD Wave Analysis – 14 March 2025

USDCAD: ⬇️ Sell - USDCAD reversed from key resistance level 1.4500 - Likely to fall…

2 days ago

Solana Wave Analysis – 14 March 2025

Solana: ⬆️ Buy - Solana reversed from the long-term support level 113.75 - Likely to…

2 days ago

Adobe Wave Analysis – 13 March 2025

Adobe: ⬇️ Sell - Adobe broke round support level 400.00 - Likely to fall to…

2 days ago