Forex Today: Gold rises to record-high as USD struggles to rebound after dismal jobs data
Here is what you need to know on Monday, September 8:
The US Dollar (USD) finds it difficult to stage a rebound to start the new week after suffering large losses on Friday. The European economic calendar will feature Sentix Investor Confidence data for September and French MPs will debate a no confidence vote in Prime Minister François Bayrou later in the day.
US Dollar Price Last 7 Days
The table below shows the percentage change of US Dollar (USD) against listed major currencies last 7 days. US Dollar was the weakest against the Australian Dollar.
| USD | EUR | GBP | JPY | CAD | AUD | NZD | CHF | |
|---|---|---|---|---|---|---|---|---|
| USD | -0.29% | -0.19% | 0.40% | 0.59% | -0.60% | -0.59% | -0.44% | |
| EUR | 0.29% | 0.10% | 0.62% | 0.88% | -0.30% | -0.30% | -0.15% | |
| GBP | 0.19% | -0.10% | 0.42% | 0.78% | -0.40% | -0.40% | -0.20% | |
| JPY | -0.40% | -0.62% | -0.42% | 0.26% | -0.97% | -0.94% | -0.79% | |
| CAD | -0.59% | -0.88% | -0.78% | -0.26% | -1.17% | -1.17% | -0.97% | |
| AUD | 0.60% | 0.30% | 0.40% | 0.97% | 1.17% | -0.00% | 0.21% | |
| NZD | 0.59% | 0.30% | 0.40% | 0.94% | 1.17% | 0.00% | 0.20% | |
| CHF | 0.44% | 0.15% | 0.20% | 0.79% | 0.97% | -0.21% | -0.20% |
The heat map shows percentage changes of major currencies against each other. The base currency is picked from the left column, while the quote currency is picked from the top row. For example, if you pick the US Dollar from the left column and move along the horizontal line to the Japanese Yen, the percentage change displayed in the box will represent USD (base)/JPY (quote).
The US Bureau of Labor Statistics (BLS) reported on Friday that Nonfarm Payrolls (NFP) rose by 22,000 in August. This reading followed the 79,000 increase (revised from 73,000) recorded in July and missed the market expectation of 75,000 by a wide margin. In this period, the Unemployment Rate edged higher to 4.3%, as anticipated. In its press release, the BLS noted that the change in total Nonfarm Payrolls employment for June was revised down by 27,000, from 14,000 to -13,000. With the immediate reaction, the USD Index turned south and lost more than 0.5% on the day. Early Monday, the index is marginally lower on the day below 97.70, while US stock index futures cling to modest gains. On Tuesday, the BLS will release the preliminary estimate of the upcoming annual benchmark revision to the establishment survey data.
The data from China showed earlier in the day that the trade surplus widened to $102.33 billion in August from $98.24 billion in July. On a yearly basis, Imports rose by 1.3% in August, while Exports grew by 4.4%. After closing decisively higher on Friday, AUD/USD holds its ground early Monday and climbs toward 0.6600.
EUR/USD reached its highest level since late July above 1.1750 on Friday following the US employment data. In the European morning on Monday, the pair stays relatively quiet and fluctuates above 1.1700. Earlier in the day, the data from Germany showed that Industrial Production expanded by 1.3% on a monthly basis in July, matching the market expectation.
GBP/USD holds steady above 1.3500 after rising more than 0.5% on Friday and closing the week with small gains.
Gold rose more than 1% on Friday and gained about 4% for the week, as the benchmark 10-year US Treasury bond yield slumped to its lowest level since April below 4.1% after the disappointing labor market report. XAU/USD preserves its bullish momentum early Monday and trades at a fresh record-high above $3,600.
USD/JPY opened with a bullish gap and rose toward 148.50 in the Asian session on Monday. With the USD failing to attract buyers, however, the pair reversed its direction and was last seen trading flat on the day near 147.50.
Nonfarm Payrolls FAQs
Nonfarm Payrolls (NFP) are part of the US Bureau of Labor Statistics monthly jobs report. The Nonfarm Payrolls component specifically measures the change in the number of people employed in the US during the previous month, excluding the farming industry.
The Nonfarm Payrolls figure can influence the decisions of the Federal Reserve by providing a measure of how successfully the Fed is meeting its mandate of fostering full employment and 2% inflation. A relatively high NFP figure means more people are in employment, earning more money and therefore probably spending more. A relatively low Nonfarm Payrolls’ result, on the either hand, could mean people are struggling to find work. The Fed will typically raise interest rates to combat high inflation triggered by low unemployment, and lower them to stimulate a stagnant labor market.
Nonfarm Payrolls generally have a positive correlation with the US Dollar. This means when payrolls’ figures come out higher-than-expected the USD tends to rally and vice versa when they are lower. NFPs influence the US Dollar by virtue of their impact on inflation, monetary policy expectations and interest rates. A higher NFP usually means the Federal Reserve will be more tight in its monetary policy, supporting the USD.
Nonfarm Payrolls are generally negatively-correlated with the price of Gold. This means a higher-than-expected payrolls’ figure will have a depressing effect on the Gold price and vice versa. Higher NFP generally has a positive effect on the value of the USD, and like most major commodities Gold is priced in US Dollars. If the USD gains in value, therefore, it requires less Dollars to buy an ounce of Gold. Also, higher interest rates (typically helped higher NFPs) also lessen the attractiveness of Gold as an investment compared to staying in cash, where the money will at least earn interest.
Nonfarm Payrolls is only one component within a bigger jobs report and it can be overshadowed by the other components. At times, when NFP come out higher-than-forecast, but the Average Weekly Earnings is lower than expected, the market has ignored the potentially inflationary effect of the headline result and interpreted the fall in earnings as deflationary. The Participation Rate and the Average Weekly Hours components can also influence the market reaction, but only in seldom events like the “Great Resignation” or the Global Financial Crisis.
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