U.S. Dollar Gains Ground After Strong Non Farm Payrolls Report

Key Insights

• The U.S. economy added 372,000 jobs in June. 
• The strong report guarantees that the Fed will raise rates by at least 75 bps at the next meeting. 
• Treasury yields are moving higher after the release of the report, which is bullish for the U.S. dollar. 

U.S. Dollar Stays Strong Ahead Of The Weekend

The U.S. Dollar Index moved higher after the release of Non Farm Payrolls report for June. The report indicated that the U.S. economy added 372,000 jobs, compared to analyst consensus of 268,000. Unemployment Rate remained unchanged at 3.6%, while Participation Rate decreased from 62.3% in May to 62.2% in June.

The Non Farm Payrolls report showed that the U.S. economy remained in a decent shape. In recent days, markets were worried about a potential recession. However, there are no signs of a recession in the U.S. as the labor market stays strong.

There are no obstacles for the Fed to raise rates. Not surprisingly, the yield of 10-year Treasuries managed to settle back above the 3.00% level and is heading towards the 3.10% level. A move above this level will open the way to the test of the resistance at 3.25%, which will be bullish for the American currency.

Euro Remains Under Strong Pressure

EUR/USD has recently made an attempt to settle below the 1.0100 level. While EUR/USD looks oversold in the near-term, the general downside trend remains strong. The European economy is facing serious challenges, and EUR/USD will likely remain under material pressure in the upcoming weeks.

The weakness of the euro increases demand for the safe-haven U.S. dollar. The U.S. economy stays strong despite high energy prices, providing additional support to the American currency.

In the upcoming days, traders will need to monitor the developments in U.S. government bond markets, as Treasury yields have a good chance to gain sustainable upside momentum after the release of the strong Non Farm Payrolls report.

For a look at all of today’s economic events, check out our economic calendar.