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Home CommoditiesForex Forexlive Americas FX News Summary June 7: US adds 272,000 new jobs, unemployment rate rises

Forexlive Americas FX News Summary June 7: US adds 272,000 new jobs, unemployment rate rises

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The US jobs report was strong, but with some ambiguous/not-so-strong elements.

  • Nonfarm payrolls rose by 272,000 compared with the expected 185,000.
  • Private sector payrolls increased by 229,000 compared to the expected 170,000.
  • Average hourly wages increased by 0.4%, compared to the expected 0.3%.
  • Average earnings up 4.1% year over year, beating expectations of 3.9%

These were some of the stronger parts of the report than I expected.

The less strong parts were:

  • The unemployment rate rose from 3.9% to 4.0%.
  • The household survey used to calculate the unemployment rate showed the number of people who said they had a job fell by 408,000.
  • The household survey also revealed that the number of full-time workers decreased by 625,000, while the number of part-time workers increased by 286,000.

Household surveys are typically more volatile than establishment surveys, which have seen larger increases in payroll.

Liz Ann Sonders of Schwab told CNBC:

“On the surface, [the report] “The economy has been doing well, but the decline in household employment has been bigger. And just to give you an idea, that tends to be a more accurate signal when the economy is at a turning point, when you’re seeing weakness in the underlying numbers.”

Next week the market will know the Fed’s views on the report when they release their interest rate decision on Wednesday. The Fed is expected to keep rates on hold. The market will be watching the Fed’s expectations for interest rates at the end of the year. At their March meeting, 3 rate cuts were expected. This will likely be reduced to 1-2 cuts (markets are expecting around 40 pips of rate cuts between now and the end of the year).

In today’s market reaction, the US dollar rose 0.52% to 1.53% against the major currencies. The New Zealand dollar and the Australian dollar sold off as commodities were sold off. China’s gold purchases have been declining for the last month, and the strong dollar and rising yields have given sellers another reason to sell commodities. This tends to weaken the New Zealand dollar and the Australian dollar, whose economies are more dependent on commodities.

From the strongest to the weakest.

  • Gold prices fell -$82, or -3.45%, to $2,293.49 today, the largest drop since November 6, 2020.
  • Silver prices fell -$2.14, or -6.88%, to $29.14, the worst percentage drop since February 2021.
  • Copper prices also fell sharply, dropping 4.82%.

Bitcoin price hit an intraday high of $71,949 but is currently trading at $69,156. Ethereum is trading at $3,684.80 after hitting a high of $3,839.70.

Yields rose, erasing some of the declines seen this week.

  • The 2-year Treasury yield is at 4.888%, +15.9 basis points. The 2-year Treasury yield is roughly flat this week.
  • The 5-year Treasury yield is 4.462%, +17.1 basis points. Yields are down 4.6 basis points this week.
  • The 10-year Treasury yield is at 4.435%, +15.5 basis points. Yields are down 6.7 basis points this week.
  • The 30-year Treasury note was yielding 4.554%, or 12.5 basis points. Yields have fallen 9.6 basis points this week.

In addition to the FOMC interest rate decision next week, the U.S. Treasury will hold auctions of 3-year, 10-year, and 30-year notes on Monday, Tuesday, and Thursday, respectively. With the 30-year note auctions scheduled for Tuesday and Thursday, it will be difficult to know whether the Fed’s interest rate decision will be made between the 10-year note auction. The Fed’s decision will be announced on Wednesday.

In the U.S. stock market today, the S&P and NASDAQ indexes fell slightly, retreating from their all-time closing highs, but still ended the week higher.

  • The Dow Jones Industrial Average fell 0.22% on the day, but was up 0.29% for the week.
  • The S&P index fell 0.11% on the day but was up 1.32% for the week.
  • The Nasdaq index fell 0.23% on the day but was up 2.3% for the week.

Thank you for your patience and support this week. Adam is expected to be back early next week. We wish you all a happy and safe weekend.

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