The Non Farm Payrolls report did not shock the markets

On Friday, the dollar weakened after the NFP data and then strengthened significantly after the ISM report for industry. Labor market data showed a cooling down, while the next publication proved that the US economy is quite resistant to high interest rates.

The EUR/USD exchange rate ended the day below 1,08 and the yields of 2-year US government bonds, after falling below 4,8, again approached 4,9%. The Dow Jones gained 0,3 percent SP500 gained 0,2 percent. and the Nasdaq Composite closed the day near open. Oil is the most expensive in many months.

The unemployment rate was disappointing

Non-farm payrolls in the US rose by 187 in August. compared to the consensus of 170, but the results for the last 2 months were revised down by a total of 110, indicating that the slowing trend in employment growth remains in force. The unemployment rate was disappointing grew from 3,5 percent. up to 3,8 percent. This was mainly due to the fact that around 700 people entered the labor market. new people. The professional activity rate increased to 62,8%. from 62,6 percent (a year ago it indicated 62,1%), which certainly pleased the Fed, because it should help keep wage pressure under greater control.

On the other hand, the ISM report for industry, released at 16:0, showed strength. The main indicator increased from 46,4 points. to 47,6 (expected 47 points). The employment index (48,5 points) and the price index (48,4 points) surprised strongly. In both cases, the market consensus was slightly above 44 points.

A greater reaction was caused by the second publication, which completely erased the upward movement of EUR/USD. It was similar on the debt market, where the US 2Y first fell below 4,8%. and then grew quite quickly to around 4,9 percent.

Oil growth

The oil market is quite interesting. Brent and WTI rose to levels not seen since January this year and November 2022, reaching USD 88,8 and USD 86, respectively. The price is mainly supported by speculation that Saudi Arabia will extend voluntary cuts by 1 million barrels a day for another month. This week it will probably be settled. Further output cuts seem likely as the Saudis will not want to put downward pressure on oil prices again, although in general the market should be able to absorb more barrels given the projected large deficit for the rest of the year.

Source: OANDA TMS Brokers