The
report
offers
critical
insights
into
the
health
of
the
U.S.
labour
market,
detailing
job
creation
in
the
non-agricultural
sector,
unveiling
the
latest
unemployment
figures,
and
tracking
changes
in
average
hourly
earnings.
This
data
release
has
the
potential
to
reshape
U.S.
interest
rate
expectations
and
steer
investor
sentiment,
which
is
why
the
report
is
closely
watched
by
market
participants.
The
report
will
almost
certainly
affect
the
exchange
rate
of
the
U.S.
dollar
(USD)
and
trigger
volatility
across
various
financial
instruments,
including
equity
indices
and
commodities.
Previous
report
The
previous
NFP
report
(published
on
6
June)
presented
a
somewhat
mixed
picture.
While
the
headline
figure,
showing
the
number
of
jobs
created,
was
above
the
market
consensus,
the
preceding
report
was
revised
downward.
At
the
same
time,
average
hourly
earnings
grew
faster
than
expected.
Overall,
the
market
interpreted
the
report
as
bullish
for
the
DXY,
which
ended
the
day
higher
by
0.50%,
while
XAUUSD
and
EURUSD
were
down
1.22%
and
0.45%,
respectively.
Market
Expectations
The
NFP
release
arrives
against
a
backdrop
of
heightened
uncertainty
and
amplified
volatility.
Financial
markets
remain
gripped
by
the
persistent
geopolitical
instability,
particularly
in
the
Middle
East
and
Eastern
Europe,
alongside
ongoing
trade
tensions
between
the
United
States
and
global
partners.
Indeed,
despite
the
NFP’s
significance,
the
ongoing
focus
on
global
trade
tariffs
could
partly
limit
its
influence
on
market
movements.
Current market positioning strongly suggests a widespread expectation for a weak report that would ostensibly provide further justification for a Federal Reserve (Fed) interest rate cut later this year. This sentiment is clearly reflected in both consensus surveys and recent price action in the U.S. Dollar Index (DXY). Thus, according to Reuters, analysts expect to see only a modest increase of approximately 110,000 jobs, the lowest projected figure since November 2024. Concurrently, the DXY is hovering near a two-year low, just shy of the 97.00 mark. The primary reason for the greenback’s recent weakness has been the prevailing dovish monetary policy expectations. In fact, the latest interest rate swaps market data implies almost a 75% chance of a 25-basis point (bps) rate cut by the Fed in September. Looking further ahead, the market currently prices in around 30% probability of a full percentage point reduction in the Fed’s benchmark rate by July of next year.
Potential
Outcomes
Kar
Yong
Ang,
a
financial
market
analyst
at
Octa
broker,
offers
a
perceptive
outlook:
‘Several
factors,
such
as
a
weak
dollar,
dovish
monetary
policy
expectations,
and
a
rather
pessimistic
consensus
for
tomorrow’s
labour
market
report
suggest
that
higher-than-expected
NFP
figures
will
likely
have
a
disproportionately
stronger
impact
on
gold
[XAUUSD]
and
EURUSD
vs
lower-than-expected
figures.
In
other
words,
a
bullish
NFP
report’s
upward
pressure
on
the
U.S.
dollar
will
likely
outweigh
the
bearish
impact
of
a
weaker-than-expected
release’.
On balance, in case the NFP report reveals stronger-than-expected results—indicating a larger increase in payrolls and/or higher growth in average hourly earnings—the greenback could experience a substantial rebound, leading to sharp downside corrections for XAUUSD and EURUSD. Conversely, should the NFP report come out weaker than expected, gold and the euro may receive only a minor boost.
‘I would treat any correction in gold as a buying opportunity’, says Kar Yong Ang. ‘XAUUSD remains in a structural uptrend due to strong fundamental reasons, so it is recommended to look for buying opportunities. Consider placing pending buy-limit orders on XAUUSD, particularly near the $3,280 level, in the event of a bearish reaction to the U.S. NFP report. Should a bullish reaction unfold, consider placing pending buy-stop orders on XAUUSD, specifically near $3,360’.
___
Disclaimer: This press release does not contain or constitute investment advice or recommendations and does not consider your investment objectives, financial situation, or needs. Any actions taken based on this content are at your sole discretion and risk—Octa does not accept any liability for any resulting losses or consequences.
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