Market Wrap – US Non-Farm Payrolls Explode

The July non-farm payrolls report showed the economy adding another 528,000 jobs, far more than the 250,000 consensuses estimate of economists.

Only the flip side, the Canadian jobs data was released at the same time and showed disappointed at -30.6K compared to +20.0K expected. Naturally, the USD/CAD pair rose.

Breaking down the US jobs number the actual unemployment rate fell to 3.5% from 3.6%. This was encouraging for markets as it matched the pre-pandemic low.

It should be noted that adding to the case for a hawkish Fed meeting in September, Average U.S hourly earnings rose 0.5% in the month compared to 0.3% expected.

It is clear from the market reaction today that the strong jobs data pushed back on the recent the idea that the United States economy is in recession as seen by the recent two consecutive quarters on negative GDP growth.

The US dollar jumped sharply after the NFP headline number was released, with the greenback posting strong gains against the EUR, GBP, CAD, and antipodean currencies.

United States Bond yields also jumped with 2-year notes up 17 basis points to 3.21 percentage, while 10-year notes increase by 12 basis point to 2.80 percent.

Gold prices also drop sharply after moving close to the psychological $1,800 level yesterday. The price of silver and also copper took a hit alongside the yellow metal.

Stock markets moved lower as well, with the Nasdaq leading the declines. It was not surprising to see the Nasdaq moving lower after its recent huge gains this week.

Tech stocks are usually high momentum and trend based and it does feel as if the recent move higher in the Nasdaq may be overbought and needed to correct.

Looking at the Fed’s funds rate the odds of a 75-basis point hike at the September Fed meeting rose to 67 percent from 40 percent on the back of today’s release.