US Dollar, Gold Price, S&P 500 React to June 2020 Jobs Data

US DOLLAR, GOLD PRICE, S&P 500 – MARKET REACTIONS TO JUNE 2020 NFP REPORT, WEEKLY JOBLESS CLAIMS DATA

• US Dollar remains under pressure with the DXY Index trading about 0.25% lower on balance immediately after the monthly nonfarm payrolls and weekly jobless claims data release
• Gold price action tumbled by about 0.5% in the run-up to the employment figures and the precious metal is currently trading near session lows
• S&P 500 Index futures extended higher toward the 3,140-price level as Wall Street continues to advance despite mixed labor market figures and rising coronavirus second wave risk

Monthly nonfarm payrolls for June and weekly jobless claims for the week ended 27-June just crossed the wires and look to dominate market headlines for Thursday’s trading session. According to the DailyFX Economic Calendar, the headline net change in NFPs was reported at 4.8-million jobs added, which topped the median economist estimate looking for 3.0-million, and compares to the prior reading of 2.5-million.

Initial claims disappointed, however, with the actual reading missing the market consensus. Continuing claims still show about 20-million Americans filing for unemployment insurance amid the lingering coronavirus pandemic.

DXY– US DOLLAR INDEX PRICE CHART: 5-MINUTE TIME FRAME (02 JULY 2020 INTRADAY)

Chart created by @RichDvorakFX with TradingView

The US Dollar Index – a basket of major currency pairs like EUR/USD, GBP/USD and USD/JPY – had an adverse knee-jerk reaction right when the jobs data dropped. This is likely explained by the US Dollar’s posturing as a top safe-haven currency. Added downward pressure likely came in response to the monthly jobs report, which also detailed the unemployment rate ticking lower from 13.3% to 11.1%.

The US Dollar has since pivoted back higher, however, and currently trades back above the 97.00-handle at the time of writing. Perhaps the whipsawed-response is owed to the far-less rosy jobless claims data reported weekly and thus regarded as more of a ‘leading’ indicator relative to NFPs.

Read More – NFP: Nonfarm Payrolls Drives the US Dollar & Currency Volatility

XAU/USD – GOLD PRICE CHART: 5-MINUTE TIME FRAME (02 JULY 2020 INTRADAY)

Chart created by @RichDvorakFX with TradingView

The price of gold continues to edge lower following the double-whammy jobs data release. Gold prices have pivoted nearly 2% below the precious metal’s year-to-date high printed earlier this week as the commodity flirts with a massive technical resistance level. That said, gold price action hovers around $1,760/oz and is an area of confluence that has recently provided buoyancy to bullion.

S&P 500 INDEX FUTURES PRICE CHART: 5-MINUTE TIME FRAME (02 JULY 2020 INTRADAY)

Chart created by @RichDvorakFX with TradingView

As for equities, the US stock market looks set to open higher largely thanks to unwavering investor risk appetite and an abundance of liquidity. According to the NFP report, “The number of unemployed persons who were on temporary layoff decreased by 4.8 million in June to 10.6 million, following a decline of 2.7 million in May. The number of permanent job losers continued to rise, increasing by 588,000 to 2.9 million in June.” Meanwhile, the number of coronavirus cases continue to rise as the pandemic persists.

This has caused another wave of Apple Inc store closures as businesses shutter and governments back-track on reopening guidelines. Not to mention, ongoing China tension remains a threat to stock market outlook. Alas, with global officials pumping up stocks and investor confidence, the risk of equities becoming increasingly detached from their economic fundamentals seems to have grown exponentially. Complacency has ballooned alongside the Federal Reserve balance sheet, which has widely contributed to unwavering risk appetite, and led some market participants to incorrectly believe the troubling and misleading mantra that “stocks only got up.” To be clear, stocks can, and eventually do, go down.

-- Written by Rich Dvorak, Analyst for DailyFX.com

Connect with @RichDvorakFX on Twitter for real-time market insight