NFP Pounds Expectations: USD Up, Gold Down

August 8, 2016

Friday’s NFP pounded expectations, with the July print showing an addition of 255,000 jobs.

USD Non-Farm Employment Change: 255K v 180K expected and 292K (revised up from 287K) previous.
USD Unemployment Rate: 4.9% v 4.8% expected and 4.9% previous.
USD Average Hourly Earnings m/m: 0.3% v 0.2% expected and 0.1% previous.

What a blowout! And for the second consecutive month too.

Following last month’s release we said this:

“…but as always, the number is just a single month’s headline beat. Nothing more, nothing less.”

Well two in a row certainly starts to look a lot better again!

The broad based additions are a huge step in the right direction for the Fed’s monetary policy normalisation process, as the labour market continues to be the one and only shining light for a central bank who’s desperate to keep communication clear and the economy on track.

Once again in today’s global low growth, low rate environment, textbook economic theory is continuing to be proven wrong. A spluttering economy with terrible growth forecasts is meant to put a dampener on a company’s willingness to hire. But not here.

The long term, low interest rate environment is essentially forcing firms into saying that the time may as well be now. Amazing stuff really.

From a technicals point of view, the outcome was fairly straight forward, with the US Dollar having a rocket put under it and Gold being slapped down. Funnily enough, the first from major, higher time frame support, while the second from major, higher time frame resistance!

USD/JPY Daily:
Click on chart to see a larger view.

As you can see on the USD/JPY daily chart, price had returned to where we were before the rumours of helicopter money began. A hugely significant level of higher time frame support/resistance.

USD/JPY Hourly:
Click on chart to see a larger view.

The intra-day hourly chart then shows the pair’s reaction to NFP. A bounce out of support, but again, capped perfectly by the first point of resistance!

A higher time frame resistance level that you can now look for lower time frame re-test opportunities in your preferred direction. A tactic that we’ll be talking about on the @VantageFX Twitter feed through the week.

XAU/USD Weekly:
Click on chart to see a larger view.

The inverse opportunity was also found on the Gold chart that we’ve been watching approach major higher time frame trend line resistance.

XAU/USD Hourly:
Click on chart to see a larger view.

In that previous blog, we were looking to trade the bounce off support in the hope of getting in early for a break-out of the major trend line resistance level. But if you weren’t out already, things have definitely now changed.

Enjoy your week!


On the Calendar Monday:
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Dane Williams – @VantageFX

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