How did the market react after July’s Non-Farm Payrolls?

Mark O’Donnell Blackbull Markets Limited

The Non-Farm Payrolls (NFP) for July 2022 surprised many as it reported that the US economy added 528,000 jobs, more than twice the consensus forecast. Total NFP employment has now returned to the pre-pandemic level, when 20 million jobs were lost.

At the same time, the US Unemployment Rate decreased to 3.5%, the lowest rate since February 2020. Additionally, US Average Hourly Earnings MoM for July jumped by 0.5% for the month and 5.2% over the year ending in July.

US stocks ended last week mixed after the strong NFP. While the Dow Jones Industrial Average increased by 0.2%, the S&P 500 and NASDAQ 100 fell by 0.2% and 0.5% respectively. The weekly closing, however, shows that NASDAQ 100 gained 2.2%, the S&P 500 gained 0.4%, and the Dow Jones lost 0.1%. Gold and silver finished sharply lower, as metal traders took in the jobs and employment reports. XAU/USD fell by almost 0.90%, closing at $1,774 per ounce, while XAG/USD slipped by nearly 1.40% to 19.88 last Friday.

The data releases sent the US Dollar Index (DXY) to the upside, helping combat the decline it has experienced over the past few days. The DXY jumped 0.88% to above 106.60.

With individual forex pairs, the USD made significant gains, including:

EUR/USD fell by 0.67% to 1.01803
GBP/USD fell by 0.75% to 1.20703
AUD/USD fell by 0.84% to 0.69116
NZD/USD fell by 0.91% to 0.62260

The USD/JPY was the biggest mover, booking a 1.57% gain to 135.03. Technical analysis anticipated this move in the USD/JPY, with the DeMarker Indicator below 30, suggesting an oversold bias and prime conditions for a reversal. This uptrend might also continue as the price closed above the 50-EMA. Key areas to the upside might include 135.50, 135.60, 136.00, and 136.60.

USD/JPY 1D, with DeMarker Indicator and 50-EMA

Author

Mark O’Donnell

Blackbull Markets Limited

Mark O’Donnell is a Research Analyst with BlackBull Markets in Auckland, New Zealand.

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