XAUUSD – Gold Hits Monthly Lows on Strong US Jobs Data
The China kept its Gold buying paused at 18 month and 72.85 Million Troy ounces Gold in the May month, it is unchanged from the April month. So Gold prices are plunged last day after the US NFP data and China pausing of Gold purchases in the May month.
XAUUSD is moving in an Ascending channel and the market has reached the higher high area of the channel
Gold prices plummeted to a four-week low after the US Bureau of Labor Statistics (BLS) revealed that the labor market remained strong and China halted its purchase of the golden metal. Consequently, with the XAU/USD trading at $2,295, the non-yielding metal dropped by more than 3%.
The latest US Nonfarm Payrolls report for May showed that the labor market added more people to the workforce, exceeding estimates. Despite this, the same report revealed an uptick in the Unemployment Rate, while Average Hourly Earnings saw a slight increase.
After the data release, XAU/USD continued its decline, which had started during Friday’s Asian session. The news that the People’s Bank of China (PBOC) paused its 18-month bullion buying spree further pressured the precious metal.
According to MarketWatch, “Holdings of the precious metal by the PBOC held steady at 72.80 million troy ounces for May.”
So far, Gold has dropped from $2,387 to $2,304 and is on the verge of falling below the $2,300 mark. Meanwhile, US Treasury bond yields are surging, with the 10-year bond yield climbing 14 basis points to 4.43%, strengthening the Greenback.
The DXY, an index of the US Dollar against six other currencies, increased by 0.79% to 104.91.
Market participants are now focusing on next week’s US inflation data and the Federal Reserve’s (Fed) monetary policy meeting. The US Consumer Price Index (CPI) is expected to remain steady, but any reacceleration could trigger further losses for gold.
Gold Prices on the Defensive After Strong US Jobs Report
The US Bureau of Labor Statistics reported that May’s Nonfarm Payrolls increased by 272,000, surpassing the forecast of 185,000 and April’s figure of 165,000.
The Unemployment Rate rose from 3.9% to 4%, while Average Hourly Earnings increased by 4.1% year-over-year, up from the previous 4%.
XAUUSD is moving in box pattern and market has reached support area of the pattern
A stronger-than-expected US NFP report sparked speculation that the Fed will keep interest rates higher for longer.
After the data release, the December 2024 CBOT fed funds rate futures contract anticipated 27 basis points (bps) of easing, which is 12 bps less than on Thursday.
The odds for a Fed rate cut in September dropped from 55% to 47%.
EURUSD – Drops as Strong US NFP Boosts Greenback
The ECB President did not hinted another rate cut in the next month or August month followed by this month, US NFP Data proved resilient numbers in the Job market, Euro currency double down after the ECB rate cut and US NFP data this week.
EURUSD is moving in Ascending channel and market has reached higher low area of the channel
On Friday, the EUR/USD pair experienced a sharp decline, retreating following the release of robust US Nonfarm Payrolls data and cautious remarks from European Central Bank (ECB) President Lagarde regarding the possibility of further rate cuts.
US Nonfarm Payrolls exceeded expectations by adding 272,000 net new jobs in May, well above the forecasted 185,000, with only a slight downward revision for the previous month. Additionally, US Average Hourly Earnings outpaced expectations, indicating stronger wage growth than anticipated.
Despite a slight increase to 4.0%, the US Unemployment Rate reflected a still-tight labor market, dampening hopes for broad-market rate cuts. Consequently, traders adjusted their expectations, with the CME’s FedWatch Tool indicating a decrease in the probability of a rate cut in September from 70% to 51%.
In contrast, ECB President Lagarde’s comments hinted at a cautious approach to further rate cuts. She noted the need for firmer progress on disinflation before considering additional cuts, tempering expectations for a follow-up rate cut in July. Lagarde’s stance, interpreted as hawkish or at least not dovish, hindered Euro bulls’ hopes for a late-session rebound to close the trading week.
USDJPY – Skyrockets After US Nonfarm Payrolls Release
The Deputy Governor of BoJ Ryozo Humino said inflation is rising in the Japan economy by weakness of currency not by consumer spending. Consumer spending is very low due to increase of import Goods. FX Intervention by BoJ is much needed to strong JPY against Counter pairs.
USDJPY is moving in Ascending channel and market has fallen from the higher high area of the channel
The NFP data, as reported by the US Bureau of Statistics (BLS), revealed a rise in employment figures in the US, with 272,000 new jobs added in May, surpassing the market’s expectation of 185,000. Additionally, the April figure was revised down to 165,000.
Average Hourly Earnings also exceeded estimates, showing a year-over-year growth of 4.1%, higher than the forecasted 3.9% and the revised-up 4.0% in April. However, the Unemployment Rate rose to 4.0%, slightly above the forecasted 3.9%.
Overall, the data suggests a stronger US labor market than previously thought, especially in light of earlier negative minor employment reports. The possibility of higher headline and core inflation due to the uptick in wage inflation could deter the US Federal Reserve (Fed) from cutting interest rates. Prior to the NFP release, the probability of a September rate cut was around 67%, which decreased to 53% post-NFP.
The contrast with Japanese wage data further propelled USD/JPY’s upward movement. Real wages in Japan continued to decline, making it challenging for the Bank of Japan (BoJ) to normalize its monetary policy. Rumors of a reduction in the BoJ’s bond purchases also weighed on USD/JPY earlier in the week.
However, the upside potential for USD/JPY may be capped by potential intervention from Japanese authorities to buy the Yen in the FX markets. Deputy Governor of the BoJ Ryozo Himino reiterated concerns about the negative impact of a weak JPY on the economy and suggested the possibility of direct intervention to support the currency.
Himino emphasized the importance of inflation driven by higher wages rather than a weak currency for a dynamic economy. Therefore, the BoJ’s stance on intervention and the ongoing wage dynamics in Japan could influence the future direction of USD/JPY.
USDCHF – Rises on Strong US Labor Market
The Swiss franc is depreciated after the US NFP data posted Robust numbers as 272K in the May month and surpassed 188K printed in the April month. SNB may do another rate cut in this June 20 meeting due to inflation cooling towards 0.30% in the May month from 0.20% in the April month.
USDCHF is moving in Descending channel and market has rebounded from the lower low area of the channel
The USD/CHF pair has received a boost following the release of updated Nonfarm Payroll (NFP) figures from the US on Friday, which surpassed market expectations. As market sentiment leans towards a potentially more hawkish stance by the Federal Reserve, the divergences between the Fed and the Swiss National Bank (SNB) may favor the US Dollar.
The latest NFP data for May expanded to 272,000, a significant increase from the revised reading of 165,000 for April, exceeding market estimates of 185,000. Such robust data has led to a decrease in the likelihood of a Fed rate cut in September. Additionally, the US Unemployment Rate rose to 4% from the previous 3.9%, accompanied by a slight decline in the Labor Force Participation Rate to 62.5% from the former 62.7%. Meanwhile, Average Hourly Earnings experienced a year-over-year growth of 4.1% from the revised 4% in April, indicating an increase in wage inflation.
Following the data release, US Treasury yields surged, with the 2-year, 5-year, and 10-year rates reaching 4.80%, 4.44%, and 4.41%, respectively, contributing to the strengthening of the US Dollar.
In contrast, the SNB initiated an easing cycle during its March meeting, reducing rates by 25 basis points to reach 1.5%. Currently, the market predicts a 55% probability of another rate cut occurring in the upcoming meeting scheduled for June 20.
USDCAD – Canadian Dollar Gains, But US Dollar Surges on Strong NFP
The Canadian Job Numbers came at higher than expected last day in the May month, Unemployment rate increased to 6.2% in the May month from 6.1% in the April month. The Canadian Dollar moved higher after the Job numbers and Wage Growth came higher in the May month.
USDCAD has broken Descending Triangle in Upside
The Canadian Dollar (CAD) showed mixed performance on Friday, rising against most of its major currency peers but slipping against the US Dollar (USD). The CAD lost 0.6% against the Greenback after a strong US Nonfarm Payrolls (NFP) report boosted the USD, diminishing investor expectations for a September rate cut from the Federal Reserve (Fed).
Canada added more jobs than expected in May, but the increase was still below previous figures, limiting the CAD’s upward momentum. Hourly wages gained ground in both Canada and the US, while the US Unemployment Rate edged higher, adding a cautionary note to an otherwise strong performance against market forecasts.
Daily Digest: Market Movers
CAD Performance: The Canadian Dollar climbed against most major currencies but fell by 0.6% against the US Dollar.
US Nonfarm Payrolls: Strong NFP data sent the USD broadly higher, weakening hopes for a September rate cut from the Fed.
Canadian Job Data: Although Canada added more jobs than expected in May, the figure was below previous levels, curbing CAD gains.
Wage Growth: Hourly wages increased in both Canada and the US.
US Unemployment Rate: The rate ticked higher, providing a cautious contrast to the strong overall labor data.
USD INDEX – US Dollar Rises as Strong NFP Delays Rate Cuts
The US NFP Data for the May month came at 272K versus 188K printed in the April month, Unemployment rate came at 4.0% from 3.9%, Wage growth increased to 4.1% in the May month from 4.0%. Overall Robust Job Numbers makes US Dollar moved higher in the market.
USD Index Market price is moving in Ascending channel and market has reached higher low area of the channel
On Friday, the US Dollar Index (DXY) extended its winning streak following stronger-than-expected labor market data. The robust Nonfarm Payrolls report, combined with an increase in wage inflation, highlights a resilient economy that may justify delaying rate cuts by the Federal Reserve (Fed).
Attention now turns to future Fed meetings, with the market closely monitoring any shifts in monetary policy following the positive labor data. The odds of rate cuts for June and July remain low after the strong employment data, falling to around 50% for September.
Daily Digest: Market Movers
DXY Strengthens Backed by Solid Economic Results
Nonfarm Payrolls for May surged by 272,000, surpassing market projections of 185,000 and showing substantial growth from April’s revised figure of 165,000.
Unemployment Rate slightly increased to 4% from 3.9%.
Wage Inflation Data, as indicated by the percentage change in Average Hourly Earnings, rose to 4.1% year-over-year, up from the revised 4% in April.
Meanwhile, Treasury Yields followed an upward trajectory, with the 2-year, 5-year, and 10-year rates climbing to 4.85%, 4.44%, and 4.41%, respectively, all increasing by more than 2%.
GBPUSD – Struggles at 1.2800, Falls to 1.2720s After NFP
The UK Pound faced downward pressure after the US NFP Data printed last day in higher numbers. FED rate cut is delayed by economists polls due to Job Numbers showing higher and wages also increased to 4.0% from 3.9% in the April month.
GBPUSD is moving in Ascending channel and market has reached higher low area of the channel
The British Pound faced a sharp decline against the US Dollar following the release of upbeat US labor market data by the US Bureau of Labor Statistics (BLS). The report indicated that the US jobs market continues to outperform expectations, surpassing consensus estimates and thereby strengthening the Greenback. Consequently, the GBP/USD pair plummeted near the week’s lows, with the exchange rate trading at 1.2722, marking a decrease of 0.53% at the time of writing.
AUDUSD – Falls to 0.6660 Ahead of US NFP
The RBA Governor Michelle Bullock said RBA will do another rate hike this year if inflation rate did not come to 2% target. Australian Dollar moving higher after the China trade surplus came higher in the May month and Exports grew higher in the May month.
AUDUSD is moving in box pattern and market has reached support area of the pattern
The Australian Dollar faced downward pressure amidst uncertainty ahead of the release of the United States Nonfarm Payrolls (NFP) report for May, which limited the upside potential for risk-perceived assets.
Market sentiment turned cautious as investors awaited the US NFP report, which is expected to influence expectations regarding Federal Reserve (Fed) rate cuts.
Forecasts for the US Employment report suggested an addition of 185,000 payrolls, higher than the previous release of 175,000, while the Unemployment Rate was anticipated to remain steady at 3.9%. Investors also awaited the Average Hourly Earnings data, which measures wage growth momentum. Annual Average Hourly Earnings were projected to have increased steadily by 3.9%, with monthly wage growth expected to rise at a faster pace of 0.3% compared to the previous release of 0.2%.
Positive payrolls and wage growth data would dampen expectations of Fed interest rate cuts, with the CME FedWatch tool indicating September as the earliest point for potential unwinding of the restrictive interest rate stance. Conversely, weaker figures would bolster expectations of Fed rate cuts in September.
Meanwhile, the Australian Dollar maintained its gains as the Reserve Bank of Australia (RBA) signaled a stance divergent from rate cuts anticipated by other central banks. RBA Governor Michele Bullock’s hawkish guidance on the interest rate outlook on Wednesday diminished expectations for RBA rate cuts this year. Bullock suggested the possibility of increasing interest rates further if inflation fails to return to the target range of 1%-3%. Similar sentiments were echoed by the Reserve Bank of New Zealand (RBNZ), expected to consider rolling back its tight interest rate stance next year.
NZDUSD – Holds Near 0.6200 Before US NFP
The NZ Dollar moved higher due to RBNZ rate cut decision is delayed this year due to more inflation reading persistence in the NZ economy. US Domestic data mixed readings moving NZ Dollar down from higher levels.
NZDUSD is moving in Ascending channel and market has reached higher low area of the channel
These gains were bolstered by expectations of interest rate differentials between the Reserve Bank of New Zealand (RBNZ) and the Federal Reserve (Fed). The RBNZ is anticipated to maintain interest rates unchanged throughout the year, while the Fed is expected to implement two rate cuts. Investors speculate that the Fed may commence its policy normalization process as early as the September meeting.
The New Zealand Dollar also benefited from a positive market sentiment. However, uncertainty may arise after the release of the United States (US) Nonfarm Payrolls (NFP) report for May, scheduled for 12:30 GMT. Market expectations suggest that the report will indicate the addition of 185,000 fresh payrolls by employers, surpassing the prior release of 185,000.
Investor focus will also be on the Average Hourly Earnings data for May, which reflects the pace of wage growth momentum. Annual Average Hourly Earnings are projected to have maintained steady growth at 3.9%. The US official Employment data, which reflects the health of the country’s labor market, will significantly influence expectations for Fed interest-rate cuts in September.
CRUDE OIL – WTI Rises to Near $75.50 on Increased Fed Rate Cut Bets
The CrudeOil prices are remain flat after the OPEC+ decided to rate cut till 2025 due to demand lower in the Global level. The US Domestic data gives mixed bags of data makes Crudeoil more volatile this week. US have 4.0 Million Barrels inventory this week is another drawback for Crudeoil prices in the market.
XTIUSD is moving in Descending channel and market has rebounded from the lower low area of the channel
West Texas Intermediate (WTI) Oil prices extended their gains for the third consecutive session, trading around $75.50 per barrel during the Asian session on Friday. The appreciation in crude oil prices can be attributed to rising speculation of an interest rate cut by the US Federal Reserve (Fed) in September, following a 25-basis point rate cut implemented by the European Central Bank (ECB) on Thursday.
A Reuters poll conducted from May 31 to June 5 indicated that nearly two-thirds of economists now predict an interest rate cut in September. Additionally, the CME FedWatch Tool suggests that the probability of a Fed rate cut in September by at least 25 basis points has increased to nearly 70.0%, up from 51.0% a week earlier.
Lower employment data from the United States (US) fueled hopes for two interest rate cuts by the Fed this year. Lower interest rates in the US, the largest oil consumer, could stimulate economic activity and boost oil demand.
The ADP US Employment Change report indicated that 152,000 new workers were added to payrolls in May, the lowest in four months and significantly below the forecast of 175,000 and the downwardly revised figure of 188,000 for April. Initial Jobless Claims in the US increased by 8,000 to 229,000 for the week ending May 31, surpassing market expectations of 220,000. This marks the highest reading since the eight-month high of 232,000 recorded in early May. Traders are awaiting the release of US employment data on Friday, including Average Hourly Earnings and Nonfarm Payrolls.
On Sunday, the Organization of the Petroleum Exporting Countries and its allies (OPEC+) agreed to extend most of their supply cuts into 2025. However, the group allowed for voluntary cuts from eight member countries to be gradually unwound starting in October. By December, more than 500,000 barrels per day (bpd) are expected to re-enter the market, with a total of 1.8 million bpd returning by June 2025, according to Reuters.
Key Points:
WTI Oil Prices: Trading around $75.50 per barrel, extending gains for the third session.
Fed Interest Rate Cut Speculation: Increased likelihood of a rate cut in September, influenced by ECB’s recent rate cut and economic forecasts.
Reuters Poll: Two-thirds of economists predict a September rate cut.
CME FedWatch Tool: Probability of a September rate cut rises to nearly 70%.
US Employment Data:
ADP Report: 152,000 new workers added in May, below forecast.
Initial Jobless Claims: Rose to 229,000, highest since early May.
OPEC+ Decisions: Extending supply cuts into 2025 with phased unwinding starting in October.
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