Non-farm payrolls turned out to be a big miss on Friday, dampening market expectations of a June rate hike.

Only 38k new jobs were added in May, as compared to market forecast of 160k, marking the slowest growth in the US job market since 2010.

The unemployment rate dropped to 4.7%, the lowest level since 2008. The reason behind this, however, is that the labour force participation rate has dropped, making it difficult to perceive this as a positive.

The disappointing jobs data has removed some uncertainty surrounding the June rate hike, and thus will help to stabilise global liquidity and exchange-rate expectations despite some corrections in the near term. In the short term, however, it will also bring in new concerns over the growth prospects for the US economy.

The S&P 500 index was quite resilient to the headwind, closing only 0.29% lower.

FX
The disappointing non-farm payroll led to a pervasive impact on the forex, commodities and treasuries markets. The Dollar Index tumbled to near 94.00 and has rebounded only marginally this morning. USD/JPY has dropped to the 106.50 area this morning, with the immediate support and resistance levels at 105.60 and 108.00 respectively. GBP/USD retraced back to the 1.4400 area after a short rally on Friday. USD/SGD retraced to the 1.3600 area after testing a three-month high at 1.3820. MACD has formed a negative crossover which shows slower momentum.

Commodities
Gold prices surged almost 3% to $1,246 as the dollar weakened and uncertainties rose. Silver has also rallied 2.8% to $16.40.  WTI Crude Oil prices, on the other hand, were little changed at the $49.00 area. The OPEC meeting didn’t come out with any freeze plan, with the Saudi Oil Minister saying it is premature to resist production as the higher oil price has eased tensions among oil exporters.

Gold


Key technical indicators:

  • Immediate resistance level: $1,286
  • Immediate support level: $1,199
  • MACD formed positive crossover

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