Trade Desk Thoughts - Non-farm Employment Change

Non-farm Employment Change (July) Actual -84k, Expected -75k, Previous -60k (revised lower from -51k) Unemployment Rate 6.1%

Release Explanation: A statistic researched, recorded and reported by the U.S. Bureau of Labor Statistics intended to represent the total number of paid U.S. workers of any business. Impacts the Market with huge volatility because of the constant revisions to the previous reporting periods. The accompanying Employment % number tends to be much more reliable in its monthly report. The Average Hourly Earnings will add to, or contain the impact of the number of jobs created. These 3 components go to make for explosive NFP Fridays. Outside of the Interest Rate Statement, this is the most important guide for US$ traders planning for the weeks and months ahead as the Labor Market will indicate the potential strength of future economic growth. A strong economy usually equates to a strong currency.

Trade Desk Thoughts: The headline number of unemployed moved to -84k and reflected a loss of jobs in all sectors of the U.S. economy. The only exception was government employment that added 17k positions. The unemployment rate spiked from last month's read of 5.7% to 6.1% in a move that reflects the weekly jobless claims movement, that have been easily holding above 400k each week for most of this year. The unemployment rate is at a five year high. These numbers may show that the U.S. economy will not be able to easily rely on a consumer lead recovery, and that may force the Federal Reserve to rethink the stance on increasing interest rates to tackle inflation. The signals now are more in-line with a rate cut, as intimated by a FOMC member this week.

Forex Technical Reaction: The resolve of the dollar buyers will now get tested. The major pairs are all at oversold levels that looked to be waiting for a signal that offers some relief from the selling, and these numbers on the NFP may offer just that. The Euro, pound, swissy cad and aussie all may initial gains on the dollar after the release. The swing points look to be 1.4400 on euro, 1.7850 on the pound, 0.8400 on aussie, and 1.0600 on cad. It will be interesting to see whether any of the major pairs can test those areas over the next few sessions.

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