Tension shrouds the financial markets as an unimpressive NFP figure which has failed to meet expectations has resulted in investor anxiety. Despite the positive ADP release on Wednesday, this very weak NFP result of 142k on Friday suggests that external global concerns and erratic movements within the stock markets have had an adverse impact on employment in the United States. With employment failing to thrive in the US economy, this affects one of the Fed’s two mandates to promote maximum sustainable employment. USD weakness may take the spotlight as market participants reduce their bets on a rate rise as this negative NFP has offered a compelling reason for the Fed to put off raising rates in 2015.
Gold which had already received an extended period of pressure from the string of robust data from the United States may likely appreciate on the back of the USD depreciating. This negative NFP release has not only weakened the USD but decreased the likelihood of a rate hike in 2015, and this will translate to Gold finding some support. The 1100.00 level on Gold may act as a floor which should aid any re-found upside bullish momentum.
Overall, the conclusion to take from the NFP this Friday is that the argument for a US interest rate rise in October has drastically weakened. Dollar weakness may dominate the markets with additional economic data releases from the States having a minor impact on the data dependent condition which the Fed put forward. NFP results may have to be phenomenal next month for expectations to be met of a US rate increase before 2016.
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