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August 06, 2021 @ 17:12 +03:00
Strong US job market data sharply increases the chances of an imminent reversal of the Fed’s monetary policy, contributing to strengthening the Dollar, which could start a prolonged upward trend over the coming weeks and even months.
943K jobs were created in July after 938K (revised up from 850K) a month earlier. This is an apparent acceleration in the normalisation of the labour market after very sluggish growth in previous months. A total of 146.8M jobs in the economy compared to a peak of 152.5M in February 2020, which means there are still around 5.7M to full recovery.
Average hourly earnings rose 0.4% to the previous month and 4% to July last year. The rebound reflects increased competition between employers for staff, threatening to become a self-sustaining inflationary spiral.
Traders should pay attention to the support area near 1.1700 in the EURUSD. A sustained break below these levels would signal the start of an extensive recovery for the Dollar. But the same news is not so straightforward for the stock market.
The S&P500 futures have rewritten record levels and are hovering around those levels. Still, a persistent strengthening of the Dollar will almost certainly reverse the short-term bullish sentiment, giving way to a corrective pullback.
The FxPro Analyst Team