NFP Denies Expectations: USD Goes Up, Gold Goes Down


Friday’s NFP denied all expectations, with the July print adding 255,000 jobs.

USD Non-Farm Employment Change: 255K v 180K expected and 292K (revised up from 287K) previous.

USD Unemployment Rate: 4.9% v 4.8% expected and 4.9% previous.

USD Average Hourly Earnings m/m: 0.3% v 0.2% expected and 0.1% previous.

And this is for the second consecutive month.

After last month’s release we said:

“…but as always, the number is just a single month’s headline beat. Nothing more, nothing less.”

Well, two in a row certainly starts to look a lot better again!

The broad based additions are a huge step in the right direction for the Fed’s monetary policy normalisation process, as the labour market continues to be the one and only shining light for a central bank who’s desperate to keep communication clear and the economy on track.

Once again in today’s global low growth, low rate environment, textbook economic theory is continuing to be proven wrong. A spluttering economy with terrible growth forecasts is meant to put a dampener on a company’s willingness to hire. But not here.

The long term, low interest rate environment is essentially forcing firms into saying that the time may as well be now. Amazing stuff really.

From a technicals point of view, the outcome was fairly straight forward, with the US Dollar having a rocket put under it and Gold being slapped down. Funnily enough, the first from major, higher time frame support, while the second from major, higher time frame resistance!

USD/JPY daily

USD/JPY daily

As you can see on the USD/JPY daily chart, price had returned to where we were before the rumours of helicopter money began. A hugely significant level of higher time frame support/resistance.

USD/JPY hourly

USD/JPY hourly

The intra-day hourly chart then shows the pair’s reaction to NFP. A bounce out of support, but again, capped perfectly by the first point of resistance!

A higher time frame resistance level that you can now look for lower time frame re-test opportunities in your preferred direction. A tactic that we’ll be talking about on the @VantageFX Twitter feed through the week.

XAU/USD weekly

XAU/USD weekly

The inverse opportunity was also found on the Gold chart that we’ve been watching approach major higher time frame trend line resistance.

XAU/USD hourly

XAU/USD hourly

n that previous blog, we were looking to trade the bounce off support in the hope of getting in early for a break-out of the major trend line resistance level. But if you weren’t out already, things have definitely now changed.

Enjoy your week!

This Monday

CNY Trade Balance

Make the switch to Vantage FX and trade Forex with low spreads.

This is a guest post originally appeared on Vantage FX. Reposted with permission.

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