Non Farm Payrolls Market Reaction

The Non-Farm Payrolls and Unemployment Rate data were released on Thursday morning. Prior to the release, the consensus estimate figure for jobs added in June was 231,000. The actual number disappointed by falling significantly below expectations at 223,000, according to the US Labor Department. In addition, May’s numbers were revised lower substantially from the previously reported 280,000 down to 254,000.

As for unemployment in June, analysts estimated a rate of 5.4%. The actual rate was 5.3%, which was better than expected, but was mostly due to lower labor force participation. This participation rate declined sharply to 62.6%, its lowest level since 1977.

The initial market reaction to the data caused a sizable drop in the US dollar, which had been trading relatively flat prior to the news. US equity index futures, which were up modestly, climbed slightly further in pre-market trading. Gold, which had been down significantly, rebounded as the dollar weakened. Crude oil also rose substantially after yesterday’s plunge.

The EUR/USD traded back up above 1.1100 briefly before retreating slightly. USD/JPY fell back down to the 123.00 handle.

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