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Nonfarm Payrolls Report

Markets Caution Builds Ahead of Key Nonfarm Payrolls Report

📈 European stock markets decline due to economic slowdown and rising interest rates
📊 EUR/USD pair gains strength during early European trading, setting sights on 1.0900
✔️ Upbeat employment data fuels rate hike expectations, resulting in selling pressure in US equities
⚡️ US Dollar index extends correction despite policy-tightening concerns
🔥 Investors eagerly await US nonfarm payrolls data and German industrial production figures
👉 US job market growth raises concerns about more aggressive measures to control inflation
⤵️ German industrial production declines by 0.2%, indicating challenges for industrial sector
📣 Hopes for increased interest rates in Eurozone boost due to inflationary pressures
🚀 Oil prices surge due to decline in stockpiles, leading to an upswing of fuel demand during summer season
⬆️ Gold futures experience slight increase as well.

European Stocks Decline as Caution Grows Before Key U.S. Payrolls Report

European stock markets extended losses from the previous session on Friday, with investors expressing concerns about an economic slowdown and rising interest rates ahead of the highly anticipated U.S. payrolls release.

In the early trading session, Germany’s DAX index was down 0.2%, France’s CAC 40 fell 0.1%, and the U.K.’s FTSE 100 traded 0.4% lower.

EUR/USD Sets Sights On 1.0900 Resistance Level

The EUR/USD pair gains strength during early European trading, setting its sights on reclaiming the crucial resistance level at 1.0900.

Despite pressure on the US Dollar and the potential for a 25 basis point interest rate hike by the Federal Reserve in July, the EUR/USD pair shows signs of a comeback.

USD/JPY Plunges to Two-Week Low amid Risk-Off Sentiment, NFP Report to Decide Future Direction

Concerns about Japanese intervention, risk-off sentiment, and policy differences between the Fed and the Bank of Japan are pushing the USD/JPY pair to a two-week low.

However, anticipation for the US nonfarm payrolls report could swing the pair’s movement. Rising borrowing costs and US-China trade conflicts are impacting global sentiment, while the subdued US Dollar adds to bearishness.

Inflation slowdown raises doubts about the Fed’s hawkish stance, but July’s 25 basis points increase is already priced in. On the other hand, the two-year US government bond yield is climbing, supporting the USD.

With expectations of continued negative interest rates by the BoJ, dip-buying may occur. As traders trim positions before the NFP report, the impact on USD demand and Fed policy outlook will be significant.

After four weeks of gains, the USD/JPY pair is likely to see substantial weekly losses pending the report’s release.

Selling Pressure Hits US Equities as Upbeat Employment Data Fuels Rate Hike Expectations

S&P500 futures continue their decline during the Asian session, following significant selling pressure in US equities on Thursday.

The better-than-expected job additions in June have raised hopes of additional interest rate hikes by the Federal Reserve, leading to increased market volatility.

US Dollar Adjusts Despite Policy-Tightening Concerns

Despite concerns about the tightening of monetary policies, the US Dollar index extends its correction, approaching 103.05.

The American labor market remains robust, despite higher interest rates and tight credit conditions imposed by commercial banks.

Investors Awaiting US Nonfarm Payrolls Data

The investment community eagerly anticipates the release of US Nonfarm Payrolls data, with expectations of 225K job additions.

Strong U.S. Job Market Raises Concerns

The U.S. Federal Reserve is expected to continue tightening its monetary policy after pausing rate hikes in June.

Recent data revealed robust job market growth in the private sector, raising concerns that the Federal Reserve may take more aggressive measures to control inflation.

The eagerly awaited employment report, due later on Friday, will provide further insight.

German Industrial Production Falls

German industrial production declined by 0.2% in May, indicating continued challenges for the country’s industrial sector despite a small increase in the previous month.

Weak global demand from China is putting pressure on Germany’s manufacturing sector, making it difficult for the largest economy in the eurozone to bounce back from the recession earlier this year.

The Ifo institute’s index showed that the outlook for companies in June deteriorated to its lowest level since 2023, further suggesting a slow recovery.

ECB President Lagarde Boosts Expectations for Interest Rate Increases

As inflationary pressures persist in the Eurozone, hopes for increased interest rates under ECB President Christine Lagarde continue to grow stronger.

Oil Prices Surge Due To A Decline In Stockpiles

Oil prices have been on the rise for the second consecutive week, as U.S. oil stockpiles dwindled, according to the Energy Information Administration’s official data.

The report revealed a significant decrease of 1.5 million barrels in U.S. inventories for the week preceding June 30.

This decline in stockpiles has resulted in an upswing of fuel demand during the travel-heavy summer season, leading to an unexpected drop in gasoline inventories.

The Brent contract saw a surge of 0.7%, reaching $77.03, while U.S. crude futures traded higher at $72.31 per barrel. Both benchmarks projected a 2% gain for the second consecutive week. This is expected to continue due to the increasing demand and decreasing supply of oil.

In addition to the oil price surge, gold futures also experienced a slight increase of 0.3%, reaching $1,921.90/oz.

Analyst Opinion
The current situation with declining U.S. stockpiles and rising oil prices highlights the importance of maintaining a balance between supply and demand in the energy market.
As the summer season drives up fuel demand, it will be interesting to see how the industry responds to these changing market dynamics.

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Author

  • Zahari Rangelov

    Zahari Rangelov is an experienced professional Forex trader and trading mentor with knowledge in technical and fundamental analysis, medium-term trading strategies, risk management and diversification. He has been involved in the foreign exchange markets since 2005, when he opened his first live account in 2007. Currently, Zahari is the Head of Sales & Business Development at TraderFactor's London branch. He provides lectures during webinars and seminars for traders on topics such as; Psychology of market participants’ moods, Investments & speculation with different financial instruments and Automated Expert Advisors & signal providers. Zahari’s success lies in his application of research-backed techniques and practices that have helped him become a successful forex trader, a mentor to many traders, and a respected authority figure within the trading community.