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Strong US job report eased recession fears


US stock closed flat on Friday after struggling for direction throughout the session as the strong US job report eased recession fears but further supported the case for a 75 bps rate hike by the Fed to fight inflation. Earlier in the North American session, the Nonfarm Payrolls report added 372K jobs to the economy in June, exceeding market estimations of 268K and fueled the Fed to stay aggressive to combat inflation.

Two of the Federal Reserve’s officials also said that they supported raising the interest rate by 75 basis points for the second month in a row. In the Eurozone, the consensus amongst ECB policymakers remained around a 25 bps rate hike. On top of that, the EU’s ongoing energy crisis kept weighing on the shared currency as the economy is likely to face a shortage of energy after prohibiting oil imports from Russia.

The benchmarks, S&P 500 and Nasdaq 100 both edged higher on Friday as market traders remain mixed on the upbeat job report. The S&P 500 was little changed on a daily basis and the Nasdaq 100 advanced with a 0.1% gain for the day. But nine out of eleven sectors stayed in negative territory as the materials and real estate sectors are the worst-performing among all groups, losing 1.00% and 0.55%, respectively. The Dow Jones Industrial Average meanwhile declined with a 0.1% loss on Friday and the MSCI World index rose 1.6%.

Main Pairs Movement

The US dollar edged lower on Friday, losing its upside traction and retreated back to the 106.9 level after the softer risk tone lend support to the safe-haven greenback. The DXY index witnessed heavy bullish momentum and was pushed higher to a daily high above 107.7 level in the early European session, but then started to see fresh selling meanwhile surrendering most of its daily gains. The market focus remained on the Fed’s normalisation process and the next moves regarding interest rates as June’s US Nonfarm Payrolls report exceeded expectations and reaffirmed the economy’s strength.

GBP/USD advanced slightly with a 0.08% gain on Friday amid the weaker US dollar across the board. But investors remain concerned that the UK government’s controversial Northern Ireland Protocol Bill could trigger a trade war with the European Union. The cable remained under bearish pressure and dropped to a daily low below the 1.193 mark, but then regained upside strength to recover all of its daily losses. Meanwhile, EUR/USD rebounded back after dropping to a fresh 20-year low at 1.0071 during the European session. The pair was up almost 0.30% for the day.

Gold advanced with a 0.12% gain for the day after touching a daily high above $1750 during the US trading session, despite the US dollar rising to fresh 20-year highs as US bond yields surged. Meanwhile, WTI oil climbed back toward the $105 area as supply fears amongst traders have spurred a rise in oil prices.

Economic Data

CurrencyDataTime (GMT + 8)Forecast
All DaySingapore Holiday   
NZDElectronic Card Retail Sales (MoM) (Jun)06:45  
BRLBCB Focus Market Readout19:25  

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