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NFP Analysis and Talking Points

  • US Nonfarm Payrolls rose by 75k in May, missing expectations of 185k expected; Prior month revised Lower
  • US Average Hourly Earnings falls short of consensus
  • Markets Raise Bets of Federal Reserve Rate Cut

See our latest Q4 FX forecast to learn what will drive the currency through the quarter.

DATA RECAP

US NFP 75k vs. Exp. 185k (Prev. 263k, Rev. 224)

Unemployment Rate 3.6% Exp. 3.6% (Prev. 3.6%)

Average Earnings M/M 0.2% Exp. 0.3% (Prev. 0.2%)

Average Earnings Y/Y 3.1% Exp. 3.2% (Prev. 3.2%)

NFP Report Review

US Bureau of Labor Statistics reported total nonfarm payroll (NFP) employment expanded by a 75k jobs in May, missing expectations of 185k. Alongside this, the headline figure for the prior month saw a downward revision to 224k from 263k, while the unemployment rate remained at the 3.6%.

Wage Growth Eases

The Fed focussed wage data missed analyst estimates with the monthly reading showing a 0.2% rise vs Exp. 0.3%, which took the yearly rate to 3.1%. Overall, the disappointing report will further fuel expectations that the Federal Reserve will be cutting interest rates in the near-term.

Market Response

The soft jobs reports saw a weaker US Dollar across the board, while US Treasury yields also edged lower. Consequently, gold prices have pushed higher with the precious metal hovering around 2019 highs as markets raise bets of a Fed rate cut.

USD Price Chart: 1-minute time frame (Intra-day)

USD Drops on Weak NFP Report, Fed Rate Cut Bets Rising

Chart by IG

--- Written by Justin McQueen, Market Analyst

To contact Justin, email him at Justin.mcqueen@ig.com

Follow Justin on Twitter @JMcQueenFX