NFP Quick Analysis: Time for USD bulls to enjoy the fireworks – the Fed's cut may be a one-off


  • The US economy has gained 224K positions in June, much better than expected.
  • Despite a minor miss in wages, the Federal Reserve has reasons to be cheerful.
  • The greenback may extend its gains as the odds of an easing cycle diminishes. 

Fluctuations in job gains are common – and as Powell said – the average gains remain healthy and point to a robust economy. The increase of 224,000 positions has put speculation of a downturn in job hiring to an end. 

Wages have risen by only 0.2% in June – below 0.3% that was expected – but on top of an upwards revision from 0.2% to 0.3% for May. The annual pay rise is 3.1% in June, the same as in May.

The US labor market is on fire and Federal Reserve officials can sit back and enjoy the fireworks. While the central bank is set to cut interest rates at the end of the month, the upbeat Non-Farm Payrolls diminish the chances of a deep cut of 50 basis points that investors have wished for.

Fed Chair Jerome Powell and his colleagues may even consider abandoning plans to cut interest rates – but will find it hard to retreat from their promises. The central bank does not like to shock markets.

Zooming out to the longer term, the chances of a full cycle of monetary easing are also in doubt. The world's most powerful central bank has two mandates: full employment and price stability. As long as average employment remains robust, it is hard to see the Fed embarking on a long series of rate cuts. 

Inflation, the Fed's second mandate, will be tested next week. The Consumer Price Index (CPI) report for June will be closely eyed by traders.

Nevertheless, assuming CPI is OK, the Fed is unlikely to race to the bottom – something the ECB is keen on.

On this background, the US dollar has room to rise beyond the immediate reaction, especially against the vulnerable euro. 

Follow all the NFP updates live

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.

Analysis feed

Latest Forex Analysis

Editors’ Picks

EUR/USD consolidating as markets digest the new US-Sino trade truce

EUR/UDS is trading around 1.1030, little changed. Markets are digesting the US-Sino handshake deal that prevents new US tariffs that were planned for Tuesday. Euro-zone industrial output is due out.

EUR/USD News

GBP/USD slips below 1.26 as Brexit talks drag

GBP/USD has kicked off the new week with a drop below 1.26 as Brexit optimism fades. Intense weekend talks have failed to result in an accord. Negotiations continue ahead of the EU Summit. 

GBP/USD News

USD/JPY consolidating bull rally into 108 handle on US/Sino trade deal optimism

USD/JPY starts out the week flat to Friday's close after markets rallied at the end of the week. Bullish geopolitical undertones in the form of a US/Sino 'phase 1' trade deal help lift USD/JPY onto the 108 handle.

USD/JPY News

Forex Today: Markets skeptical about US-Sino trade truce and sterling suffers a hangover as talks continue

Markets are cautious regarding the US-Sino partial trade deal. The world's largest economy agreed on a "hand-shake" agreement which is yet to be written. It includes a Chinese commitment to buy agrifoods.

Read more

Gold sellers cheer US-China trade optimism against all odds

With the US and China near to end the two-year-old trade tussle, Gold bears give little importance to doubts over soft Brexit and tension surrounding Syria while flashing $1,484.70 as a quote during Monday’s Asian session.

Gold News

Forex Majors

Cryptocurrencies

Signatures