Could the Fed get derailed after weaker NFP data?

NFP data misses’ expectations

By Nadia Elbilassy | @Nadia Elbilassy | 7 July 2023

  • Non-farm payroll data fell short of expectations, adding 209K jobs compared to the anticipated 224K, potentially impacting the expected Fed rate hike in July.

  • The US dollar weakened to 102.7, while gold prices reached highs of $1930 following the release.

  • The Euro gained momentum, trending near $1.092, despite earlier challenges in German industrial production.

Market’s reaction after NFP adds 209K jobs

The long-awaited non-farm payroll data missed expectations, adding 209K vs expectations of 224K and 306K previous.

The unemployment rate also dropped to 3.6% as expected. Whilst the ADP private sector employment surprised with 497,000 jobs yesterday.

The data could now derail the Fed from the expected 25 bp rate hike in July, following the news the US dollar dropped to 102.7 ahead of the US opening bell whilst gold prices touched highs of $1930 after almost breaking the $1900 mark yesterday.

The Euro was last seen gaining momentum to trend near $1.092. after slipping to 1.0886 after German industrial production scored a negative 0.2% drop. Despite these challenges, the ECB has strongly indicated that it is highly likely to raise interest rates later this month. This move by the ECB is driven by its efforts to address elevated inflation levels and regain control over price stability in the eurozone.

The Pound was clung to gains near $1.278 after retreating from a two week high in early European trading.

Oil prices fell after the release of the data with WTI heading back to $70, trading near $71.2 after oil prices were set to be on track for the second straight weekly gain.