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US Labor Market Grows in July, Dollar Rallies Against Majors

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The US unemployment rate decreased in July 5.4% vs the expected 5.7. Yesterday the Bureau of Labor Statistics posted gains of 943,000 new jobs in July, the sharpest growth in almost a year amidst the Delta variant spreading. This was higher than the Dow Jones estimate of 845,000 jobs. 

The latest NFP data was the highest since August 2020. The US’s jobs increased by 16.7 million since May 2020, roughly 5.7 million short of the pre-pandemic employment levels.

The sectors that contribute significantly to the increase are the hospitality and leisure industries. Last year’s lockdown restrictions highly affected it. Restaurants and bars added 253,000 jobs, accounting for more than one-third of the total jobs.  

Companies are forced to increase pay as they have a high demand for workers, and averagely hourly rates have increased by $0.11 to $30.54, this increase occurring over four consecutive months. 

How did the markets react with US dollar?

The US dollar showed strong performance, rallying yesterday upon the release of the jobs report. The 10-year Treasury yield which declined sharply on Wednesday following the disappointing ADP job report, rose sharply yesterday to 8-basis points. 

Gold prices fell sharply to close at $1758.40, approaching the June support levels of $1750.

The dollar index gained 0.6% against major currencies. Even the safe havens Swiss Franc and Japanese Yen came under attack. Dollar earning its most significant gains since June. The dollar gained 0.4% and 0.9% against the Japanese Yen and Swiss Franc, respectively.

While the Euro lost 0.6% to $1.1759 earlier in the day. German Industrial (MoM), which was down 1.3%. The pound sterling lost 0.4% to the USD and traded at $1.387.

The improved employment rate is a critical indicator for the Fed to start their tapering plans, thus tightening their bond purchases. However, analysts’ views are that this is a lagging report. The figures were surveyed when the Delta variant had not spread as much as now. Therefore the impact of the increasing infection rate could be felt in the future numbers.  

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Justin N. Richards

Justin N. Richards is a Florida-based technical analyst, market researcher, educator, and trader. Justin began his career in Chicago in 2001 performing futures market analysis for floor traders at the Chicago Board of Trade and the Chicago Mercantile Exchange. He also worked for numerous brokerage firms during that time, all of which hold him in high regard, and he has been providing outstanding analysis services for traders worldwide ever since. Mr. Richards is an expert in the area of market patterns, price and time analysis as it applies to futures, Forex, and stocks. In addition to these talents, he provides educational services for investors looking to improve their analysis and trade skills. Justin has a B.A. in Business Administration from UCLA and an M.S. in Financial Markets and Trading from the Illinois Institute of Technology. Justin’s professional experience, education, and discipline, not only make him an exceptional analyst, they point him out as a reliable, hard working and intelligent business strategist who is dedicated to his craft.
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