NFP Quick Analysis: Shocker surge in jobs may trigger a much needed dollar bounce, regardless of stocks


Share:
  • The US gained 2.509 million jobs in May, beating all estimates, lowering the chances for further Fed support. 
  • Government support may be behind the move.
  • The urge for the Federal Reserve to act is lower and may strengthen the dollar. 

Shocker – but a positive one – America is getting back to work, or at least receiving support while staying at home and remaining officially on the payroll.

The Non-Farm Payrolls report for May was initially hard to believe – all those surveyed by Bloomberg and Reuters had foreseen a loss of positions in May and the US gained 2.509 million jobs. The unemployment rate fell to 13.3%, defying expectations for a leap toward 20% – despite a bounce in the unemployment rate.

The fall in wages suggests that many low-earners returned to work. Some of those classified as working are at home, yet receiving support from the government via the Paycheck program. The Bureau Labor of Statistics notes discrepancies, but that cannot explain everything. 

Stocks are rising in response to the good news, but the dollar is rising – that is a breakdown of correlation and has the following expectation.

Lower chances of Fed action

The surprisingly strong jobs report comes ahead of the Federal Reserve's decision next week. The Fed strives to achieve full employment and this labor report is going in the right direction. Therefore, it removes the need for the Fed to act. 

Without further money printing, the dollar may gain ground.

Moreover, it also decreases the odds for further government stimulus. Democrats wanted an additional $3 trillion and Republicans seemed to settle for $1 trillion. That may be scrapped. President Donald Trump has announced he will talk about the labor figures shortly, potentially taking a victory lap.

Without further funds, the dollar may rise – and it was long overdue for a correction. The greenback has suffered a losing streak against all currencies for long weeks, and not received the trigger to rise. 

Share: Feed news

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.

Follow us on Telegram

Stay updated of all the news

Join Telegram

Recommended Content


Follow us on Telegram

Stay updated of all the news

Join Telegram

Recommended Content

Editors’ Picks

EUR/USD extends recovery on Powell’s words

EUR/USD extends recovery on Powell’s words

EUR/USD has managed to stage a rebound and trades at fresh daily highs above 1.0750  after having dropped to a fresh multi-week low below 1.0670. Stocks rally and the US Dollar eases as Fed Chairman Powell said that stronger-than-expected data will see the Fed raising rates accordingly.

EUR/USD News

GBP/USD trims losses and trades above 1.2050

GBP/USD trims losses and trades above 1.2050

GBP/USD has gained traction and climbed above 1.2050, as investors assess FOMC Chairman Jerome Powell's speech. Investors cheer his optimistic words as he said he expects inflation to decline significantly this year.

GBP/USD News

Gold: Holding above $1,860, but upside still seen limited Premium

Gold: Holding above $1,860, but upside still seen limited

Spot gold saw little action throughout the first half of the day, consolidating its latest losses just above the $1,860.00 threshold. The US Dollar mainly advanced against its European rivals, as certain caution reigned ahead of a speech from US Federal Reserve (Fed) Chairman Jerome Powell, resulting in XAU/USD holding within familiar levels. 

Gold News

Google battles ChatGPT with Bard: Will this trigger rally in AI tokens?

Google battles ChatGPT with Bard: Will this trigger rally in AI tokens?

Google is getting its ChatGPT competitor ready for action, the company said that its AI service Bard would be open to trusted testers and the service is being prepared for release within the following weeks. 

Read more

Canoo Stock Forecast: Monday's GOEV plunge meets Tuesday buyers

Canoo Stock Forecast: Monday's GOEV plunge meets Tuesday buyers

Canoo (GOEV) stock is trading up more than 3% in Tuesday's premarket after a surprise share offering on Monday helped the EV small-cap to close 12.4% lower. This seemed like a major overreaction from the market, which should have seen this coming.

Read more

Majors

Cryptocurrencies

Signatures