- US Dollar Bears are pushing the Greenback lower as a result of a mixed bag NFP reports
- As the unemployment rate rises to 5.9%, intraday gains are erased by the DXY Index.
- With 850K new jobs in June, the headline net change in nonfarm payrolls was above forecast
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As markets process the most recent round of NFPs, US Dollar prices are under pressure. In immediate response to the mixed bag of jobs report, the DXY Index jumped about 0.2% lower. EUR/USD and GBP/USD price actions jumped 26-pips each and 41-pips, respectively. USD/CAD meanwhile sank 30-pips following the data.
The headline nonfarm payrolls rose by 850,000 in June, exceeding the consensus forecast of 720,000 job growth. The unemployment rate rose from 5.8% to 5.9% in June, disappointing markets that expected a decrease to 5.6%. The labor force participation rate remained steady at 61.6%, while the average hourly earnings increased at 3.6% year-over.
In our NFP preview, we noted that mixed bag scenarios could be seen as a disappointment for Fed hawks and US Dollar bulls. This seems to be true. Fair enough, however, the NFP report contains interesting information about the unemployment rate. The Bureau of Labor Statistics reported that 164,000 people left their jobs to look for work after quitting or being voluntarily fired from their job.
These signs, along with rising wage inflation, point to strong labor market demand. Although the Federal Reserve might be cautious about NFPs, it may still take a ‘half-empty’ view. This will allow the central bank more time to delay tapering asset purchases. We might also see an unwinding of the recent US Dollar strength.
