FXTM information and reviews
OctaFX information and reviews
XM information and reviews
FXCC information and reviews
Libertex information and reviews
FxPro information and reviews

Is the Recovery Finding Resistance?

17 May 2021

One of the key market drivers for the US economy and the US Dollar is the monthly employment figures. These figures include the Non-Farm Payroll, the Unemployment Rate, and monthly Average Hourly Earnings. This year so far, the most volatile bearish day was the previous Friday as these figures were released by the Bureau of Labour Statistics. As part of the article we will look at exactly how the figures have changed over the past month, as well as how these may be affecting exchange rates.

The NFP Friday figures came as a shock to the market which caused a quick collapse in the exchange rate. Non-farm payroll, instead of the expected growth to 978,000, fell sharply from 708,000 to 218,000. The unemployment rate rose from 6.0% to 6.1% instead of the expected decline to 5.8%. The largest increase in employment rose in the leisure and hospitality sectors, but these sectors still have 2.9M fewer jobs than before the crisis. The current situation confirms the opinion of US Federal Reserve officials, who previously argued that the American economy is recovering, but the target is still very far away.

Members of both political parties voiced concern that the level of employment was poorer this month than previously expected, possibly due to the high level of benefits which unemployed citizens may be receiving, though this has not formerly been proved as there being a connection. Commenting on this, the President urged companies to boost wages and make workplaces safe to entice workers, but also said people who do not take an offer for a, “suitable job” would lose unemployment benefits unless they have a specific coronavirus-related concern.

On the day of the release we can see the US Dollar Index dropped by over 0.70% in one sole trading day, which is a significant amount for a currency index. The price movement had continued to drop over the first two days of this week as the price reached a two and half month low. This negative price movement was largely driven by the employment figures which shocked the market, but the price action had changed on the release of April’s inflation figures.

Another aspect of the market which has also been in focus over the past 24-hours is the inflation rate which was released yesterday afternoon. April’s data on inflation recorded its growth above the forecasts. The consumer price index reached 0.8% instead of 0.2% MoM expected, and 4.2% instead of the forecast of 3.6% YoY. The core consumer price index rose to 0.9% instead of 0.3% MoM, and 3.0% instead of the expected 2.3% YoY. This is the largest rise in inflation in the past 12 years. The indicators have exceeded the target levels of the US Federal Reserve, but the regulator is unlikely to increase interest rates since it considers a serious increase in prices to be a temporary phenomenon.

Yesterday, the Managing Director of the Regulator, Lael Brainard, said that the demand for labor and its supply are recovering, but problems may arise along the way. She also believes that the latest data from the labor market confirmed the correctness of the regulator’s decision to maintain the monetary policy. Cleveland Federal Reserve Bank President, Loretta Meister, Philadelphia Federal Reserve Bank President, Patrick Harker, and San Francisco Federal Reserve Bank Chairman, Mary Daley, share a similar opinion.

The confirmed levels of inflation provided a considerable amount of support for the US Dollar Index and drove the index to almost fully regain losses from earlier in the week. However, experts are still uncertain whether the currency will be able to maintain bullish movement if the Federal Reserve still remains heavily Dovish on their stance with regards to its monetary policy.

The market is now largely interested to see how the Federal Reserve will react over the next few weeks in response to the inflation data. The market will also be eager to see if May’s Employment figures are likely to again remain negative, or if we will see a continuation of the US employment sector.

This article was written and submitted by eXcentral.

Disclaimer: This material is considered a marketing communication and does not contain, and should not be construed as containing investing advice or a recommendation, or an offer of or solicitation for any transactions in financial instruments or a guarantee or a prediction of future performance. Past performance is not a guarantee of or prediction of future performance.
Risk Warning: CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. 76.81% of retail investor accounts lose money when trading CFDs. You should consider whether you understand how CFDs work and whether you can afford to take the high risk of losing your money.



Precious metals trading with Vantage
Precious metals trading with Vantage

Precious metals are rare, naturally occurring elements which have a high economic value. While having value within industry, they are mostly now used as commodities...

16 Aug 2022

FreshForex improved the conditions for cryptocurrency trading
FreshForex improved the conditions for cryptocurrency trading

Due to the launch of new cryptocurrencies, we have improved spreads and swaps for all available cryptocurrencies! We are glad to announce that we have made our favorable...

15 Aug 2022

AMarkets Adds 5 New Cryptocurrencies
AMarkets Adds 5 New Cryptocurrencies

AMarkets is expanding its cryptocurrency offering by adding 5 new cryptocurrency pairs. Now, you have the opportunity to trade 19 cryptocurrencies on some of the best terms in the industry...

11 Aug 2022

The Best Online Commodities Trading Platform
The Best Online Commodities Trading Platform

If you are trading online, or you are just starting commodity trading for beginners, you probably already know which platforms are the most popular and which are the best CFD trading platforms...

8 Aug 2022

July 2022: TOP 3 NordFX Traders Earn Over $105000
July 2022: TOP 3 NordFX Traders Earn Over $105000

NordFX Brokerage company has summed up the performance of its clients' trade transactions in July 2022. The services of social trading, PAMM and CopyTrading, as well as the profit received by the company's IB-partners have also been assessed.

5 Aug 2022

A profitable deposit at FreshForex
A profitable deposit at FreshForex

We value your time and resources, so we're offering you a profitable payment method. When depositing with any cryptocurrency from our list, you get an additional 10% to your account...

2 Aug 2022

Editors' Picks

HFM information and reviews
IronFX information and reviews
FXCM information and reviews
Pepperstone information and reviews
NordFX information and reviews
Vantage information and reviews

© 2006-2022 Forex-Ratings.com

The usage of this website constitutes acceptance of the following legal information.
Any contracts of financial instruments offered to conclude bear high risks and may result in the full loss of the deposited funds. Prior to making transactions one should get acquainted with the risks to which they relate. All the information featured on the website (reviews, brokers' news, comments, analysis, quotes, forecasts or other information materials provided by Forex Ratings, as well as information provided by the partners), including graphical information about the forex companies, brokers and dealing desks, is intended solely for informational purposes, is not a means of advertising them, and doesn't imply direct instructions for investing. Forex Ratings shall not be liable for any loss, including unlimited loss of funds, which may arise directly or indirectly from the usage of this information. The editorial staff of the website does not bear any responsibility whatsoever for the content of the comments or reviews made by the site users about the forex companies. The entire responsibility for the contents rests with the commentators. Reprint of the materials is available only with the permission of the editorial staff.
We use cookies to improve your experience and to make your stay with us more comfortable. By using Forex-Ratings.com website you agree to the cookies policy.