ESS summary
ESS summary

Decent NFP gives some support to the dollar

Last Friday afternoon’s non-farm payrolls from the USA came in at 559,000, somewhat weaker than the consensus of about 650,000 but much better than last month’s very disappointing figure. The dollar has generally held steady in major pairs in the aftermath: this precis of the Employment Situation Summary from the Bureau of Labor Statistics takes a look at the key figures and the charts of XAUUSD and EURUSD.

The ESS noted that May’s 559,000 for the NFP was significantly higher than April’s 278,000, the latter appearing to be an outlier. The rate of unemployment fell 0.3% to 5.8% while average hourly earnings increased 15c to $30.33. The absolute number of unemployed in the USA is still around four million lower than its peak in April 2020.

Sectors showing significant gains in terms of jobs in May were hospitality, education and health care as travel and going out continue to return to normal in most states. Somewhat unusually, manufacturing employment rose by about 23,000 in May.

The next ESS is due on Friday 2 July at 12.30 GMT. To read the full text of May’s ESS, please visit the following link:

Effects on markets


The immediate reaction to the news was a drop by the dollar against gold and various major currencies. However, this can partially be attributed to the context of last Thursday’s fairly large gains by the greenback in most of its pairs.

Gold has retreated so far this week but as yet failed to touch last week’s low below $1,870. The golden cross of the 50 and 200 simple moving averages would normally be taken as a strong buy signal on this timeframe. There is also no longer any overbought signal on this chart. However, volumes does not suggest another strong upward movement in the immediate future: compare the very high volume of buying around early March’s lows.

The overall picture for euro-dollar is fairly similar, with a retreat last Thursday followed by gains on Friday. In this case, though, EURUSD has held near last Friday’s close so far this week with no serious attempt to reach lower. It’s also more recently here that the 50 SMA has golden crossed the 100 SMA. The main resistance in view on this chart seems to be the 38.2% zone of the weekly Fibonacci fan somewhat above $1.225.

Looking ahead, the key release for many financial markets but particularly gold and the dollar is American annual inflation this afternoon. The core reading is expected to go up to 3.4% from 3% while for non-core the consensus is 4.7% against the previous 4.2%

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