Volatility on major currency pairs with the US dollar did not increase significantly after the publication of labor market data. NFP, the unemployment rate or the change in the average earnings have not been able to influence larger exchange rate fluctuations for many months.
At one time, publications, usually on the first Friday of the month, caused great volatility. The exchange rates of the pairs with the US dollar changed rapidly and investors experienced great emotions. Currently, data from the labor market are very important for the US economy, but less and less important for investors on the currency market in terms of generating volatility.
Data published by the Bureau of Labor Statistics on Friday, September 6, show that in August total nonfarm payroll employment increased by 130 thousand, and the unemployment rate remained unchanged at 3.7 percent. The market consensus assumed an increase in jobs by 160,000, so the current publication was slightly below market expectations. As a result, the dollar slightly depreciated with very low volatility. The EUR/USD exchange rate approached the level of 1.1050, while the USD/PLN remained in the area of 3.93.
According to BLS, in August average hourly earnings for all employees on private nonfarm payrolls rose by 11 cents to USD 28.11, after a 9-cent increase in both June and July. Over the past 12 months, the average hourly earnings have increased by 3.2 percent. The market consensus assumed a reading of 3.1 percent.
Interest rate market still with a probability of more than 90 percent estimates that on September 18 the Fed will lower interest rates from 2.00-2.25 to 1.75-2.00 percent. After today's data, we can see that the US labor market remains strong, consumers are still in a good mood and wages are rising faster than inflation. Thus, only a real translation of the trade war, e.g. into a decline in employment or wages, could be an additional argument for the market for more serious Fed action.
Today investors will wait for 18:30. Then the speech of Fed President Jerome Powell is about to begin. Powell and Thomas Jordan, president of the Swiss National Bank, will take part in the discussion during a meeting organized by the Swiss Institute of International Studies in Zurich, Switzerland.
Daniel Kostecki, Chief Analyst Conotoxia Ltd.
Materials, analysis and opinions contained, referenced or provided herein are intended solely for informational and educational purposes. Personal Opinion of the author does not represent and should not be constructed as a statement or an investment advice made by Conotoxia Ltd. All indiscriminate reliance on illustrative or informational materials may lead to losses. Past performance is not a reliable indicator of future results.
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