US non-farm payrolls were positive at the first glance, but it was not enough to boost the US dollar. On closer inspection, the employment report was not that good, giving no reason to believe that the economic conditions are solid enough to warrant withdrawal of monetary stimulus.
Non-farm payrolls demonstrated growth by 287,000 in June which was far above the analysts’ median forecast of 175,000. The dollar had surged at first, but has retreated almost immediately afterwards.
The problem is that other components of the data was not particularly good. The unemployment rate went up from 4.7% to 4.9%, more than was expected. Average hourly earnings rose just about 0.1% whereas markets were counting on the same 0.2% rate of growth as in May. And even May’s already abysmal employment growth got a negative revision (from 38,000 to 11,000).
All in all, the data gave no reason to believe that the Federal Reserve will be able to raise interest rates this year, and such view is very negative to the US currency.
EUR/USD went down from 1.1062 to 1.1049 as of 17:32 GMT today but bounced from the daily low of 1.1014. GBP/USD gained from 1.2906 to 1.2947. USD/JPY edged lower from 100.77 to 100.53.
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