U.S. Dollar Retreats After Non Farm Payrolls Report

Key Insights

• Non Farm Payrolls increased from 185,000 to 187,000. 
• Treasury yields pulled back from multi-month highs as the report missed analyst estimates. 
• U.S. Dollar Index dived below the 102 level as traders bet on a less hawkish Fed. 

On August 4, U.S. released Non Farm Payrolls report , which indicated that U.S. economy added 187,000 jobs in July, compared to analyst consensus of 200,000. Unemployment Rate declined from 3.6% in June to 3.5% in July, while analysts expected that it would remain unchanged at 3.6%.

Treasury yields pulled back from multi-month highs after the release of the reports. The weaker-than-expected Non Farm Payrolls report showed that high interest rates have started to put pressure on the job market. This is bullish for bonds as the Fed may be less hawkish at the next meetings.

U.S. dollar declined against a broad basket of currencies as traders focused on the pullback in Treasury yields. U.S. Dollar Index managed to settle below the 102 level and is trying to get below 101.80.

Gold moved towards the $1945 level, supported by weaker dollar and lower Treasury yields. The Non Farm Payrolls report provided material support to gold markets, although it remains to be seen whether gold will be able to gain additional momentum as demand for safe-haven assets remains limited.

SP500 climbed towards the 4530 level as traders reacted to the job reports. Fed’s policy remains the key driver for major indices. While the weaker job market highlights the potential slowdown of the economy, traders bet on a less hawkish Fed.

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