NFP Quick Analysis: Slow hiring downbeat for the dollar, good for gold, no silver lining

  • The US economy gained 1.763 million jobs in July and the unemployment rate stands at 10.2%. 
  • Coronavirus' impact has proved devastating, pointing to a painful recession.
  • Urge to add stimulus could be countered by another reason to worsen Sino-American relations.

A V-shaped recovery? White House adviser Larry Kudlow still touted a rapid bounce as late as two weeks ago – but the shape of the labor market already looks like an L or Nike swoosh. The sharp fall due to coronavirus is turning from a temporary shutdown into more permanent job losses. 

America gained 1,763 million jobs in July, 1.462 million in private payrolls, both better than expected – but a significant deceleration from June's 4.791 million jobs. The relatively robust increase in government positions is due to a summer seasonal adjustment – which is different this year as teachers were already laid off earlier and not in July. 

Overall there still are some 10 million people who have not returned to work. Job restoration is slowing down. 

The unemployment rate fell to 10.2%, albeit alongside a drop in the participation rate to 61.4%. The more relevant U-6 Underemployment Rate – or "real unemployment rate" stands at 16.5%. 

While coronavirus figures may be improving in August, the effects of that second wave are already causing secondary, more long-term layoffs. Businesses that managed to pull through via adjustments to how they work, their workers – and government support – are beginning to throw the towel. 

The current broad dollar downtrend could continue as other countries seem to be moving up and not down. 

Gold has room to extend gains amid speculation of further monetary and fiscal stimulus. 

Political implications and markets

Will this NFP nudge politicians to push through the next large stimulus package? Republicans seem not to have grasped the magnitude of the disaster and they may now get their act together – facing voters in three months.

On the other hand, they may look at the fact that job gains beat market estimates of 1.5 million and go onto their recess without striking an accord. That would be even worse. 

The failure to prevent a cliff for the unemployed – the end of federal unemployment benefits worth $600/week for those out of work – is already taking its toll. Perhaps now, there is a high chance for a deal that will be bigger than originally intended.  

Nevertheless, politics are a double-edged sword. 

President Donald Trump – already losing his economic edge over Biden – has escalated tensions with China by acting against TikTok and WeChat. He may now additional steps to divert attention from the economy and push China harder. 

Beijing has already said that the US must create a "more favorable environment" for sustaining the trade deal – hitting it may be in peril. Markets have mostly brushed off Sino-American tensions as long as the accord – signed only in January – seemed safe. 

Danger to the trade deal could further weigh on markets.



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.

Analysis feed

FXStreet Trading Signals now available!

Access to real-time signals, community and guidance now!

Latest Analysis

Latest Forex Analysis

Editors’ Picks

AUD/USD battles 0.7700 amid covid, stimulus woes-led risk-aversion

AUD/USD holds the lower ground, testing the 0.7700 level amid broad risk-aversion that has triggered a bounce in the safe-haven US dollar. Uncertainty over the US stimulus, worries over new covid strain and lockdowns weigh on the risk appetite. 


GBP/USD pressured towards 1.3650 amid risk-off, ahead of UK jobs

GBP/USD remains depressed, heading towards 1.3650. The cable responds to the fresh risk-off mood after flashing a two-day losing streak. UK virus data suggests an improvement in covid conditions, Health Secretary Matt Hancock gives credits to activity restriction measures.


Gold: Bulls target daily extension

Gold is on the verge of an upside extension on a break of weekly resistance. XAU/USD is making progress with respect to the bullish market structure following a period of consolidation in recovery of the daily correction.

Gold news

Ripple is South Korea’s most popular cryptocurrency, but XRP price stays pressured

XRP/USD bounces off intraday low of 0.2647, stays below 21-day SMA for fifth day. As per the latest report from Messari, Bitcoin and Ripple are the most popular cryptocurrencies in South Korea.

Read more

US Dollar Index: A breach of 90.00 exposes 2021 lows at 89.20

The inability of USD-bulls to push further north of recent tops in the 91.00 region in past sessions prompted sellers to return to the markts and shifted the attention to the potential continuation of the downtrend.

US Dollar Index News

Forex Majors