The American NFP Update: What Are You Waiting For?

May 29, 2023 at 13:28 PM EDT

The US Bureau of Labor Statistics is due to report average hourly wages, nonfarm payrolls (NFP) change, and the unemployment rate on May 6 at 15:30 MT. This data is published monthly, usually on the first Friday of the month. Average hourly earnings and NFP do not include information on agriculture due to their seasonal nature. The unemployment rate is a key indicator of macroeconomic health that helps analysts gauge the state of the US economy.

How Will USD React?

Despite inflation concerns and the Russian-Ukrainian conflict, US companies continue to hire at full capacity. More people are returning to the labor market, including retirees, who are likely to be attracted by higher wages and have knowledge about how to invest in stocks. In March, the central bank raised interest rates by a quarter of a percentage point for the first time since 2018 in a bid to contain high prices.

The previous release boosted USD growth in many pairs. For example, GBPUSD lost almost 600 points. The unemployment rate was 3.7% versus 3.6% expected and the NFP figure was 431K VS. 492K. In the past six months, forecasts have often differed from actual figures, making results always difficult to predict.

How Will the USD React to the US PPI?

The Producer Price Index (PPI) measures the average change in selling prices that domestic producers receive for their production. The prices included in the PPI are from the first commercial transaction for many products and some services.

Last time the index was above expectations. Still, EURUSD gained 650 points in four hours. If you traded a lot, you could have made $650.

Dollars and Dollar-Denominated Bonds Continue To Play the Role of Safe Haven – Natixis

Natixis economists are trying to determine whether or not the dollar or dollar-denominated bonds will continue to play a safe-haven role in times of crisis and rising risk aversion.

Is the Dollar Still a Safe Haven?

Natixis: “We have found a significant impact of an increase in risk aversion (in the sense that higher risk aversion leads to a lower long-term US interest rate and an appreciation of the dollar) in relation to the long-term dollar interest rate and the dollar/euro exchange rate, but curiously not in relation to purchases of US bonds and liquid assets by non-residents.”

“We also found that in the recent period (since 2012), the impact of risk aversion on the long-term interest rate and the dollar/euro exchange rate has been stronger than in previous periods.”

Featured Image: milexmedia

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