Non-Farm Payroll(NFP); Core Indicators Show Robust Job Gains Lately, Though Recession Uncertainty Looms
Unfortunately, the United States economy contracted again with two consecutive quarters of negative GDP growth. The first quarter(Q1) GDP release showed a massive decline by -1.6% followed by the second quarter(Q2) drop by -0.9%. According to economic analysts, “recession is two consecutive quarters of declining GDP”. From these basic data metrics, should we conclude that the US economy has crawled back into recession? Has the recession hit impacted the labour market?
On the labour market frontline, key indicators show that the US Job market is flourishing and the impact of the economic meltdown is yet to be felt. Lately, the US federal reserve attempted to rattle the market by hiking the interest rate by 75-Basis points in an effort to drag the looming inflation down from a multi-year high of 9.1% to an optimal range of 2.5% to 3%. This is in line with its core objectives of maximum employment and price stability.
According to the Fed chair, Jerome Powell in his statement during the last FOMC meeting;
“Job gain is robust in recent months; unemployment rate remains low, businesses keep hiring with increased output and the Federal Reserve core objective of full employment is met”.
Another positive is that, the Department of labour “Unemployment Claims” reported last week showed a positive decline from 261k to 256k. This signals a healthy job market as the number of individuals filing for unemployment insurance decreased by 5,000.
Furthermore, the US Treasury Secretary, Janet Yellen speaking on the economic outlook stated that, “the US Economy remains resilient and now at full employment”.
From the tactical definition of recession, recession (negative global impact) is gradually taken its toll and with an aggressive hedging strategy, there are so many gains that the market present on the trading floor. In response to recession fears, the US stocks and equities experienced a volatility rush. Also, the cryptocurrency and the gold commodity markets were not left out of the bullish run as risk aversion sets in and traders hop for safe-haven.
Technically, as risk premium keeps building into the market with uncertainty, gold and cryptocurrency asset class should be added to your portfolios as they have significantly proven to be a store of value over time.
Lately, Gold (XAUUSD) made a massive pullback gains from the $1680.79 low to $1775 price level at the time of writing this article. This price increase helped erased some swift losses. In the near term, gold (XAUUSD) has the potential of breaking the $1,800 mark and possibly hit the $2,000 resistance point in the longer term.
In the cryptocurrency space, BTC/USD is up 23,679.49 from its $18,577 previous multi-days low. Altcoins such as Ethereum (ETH/USD), Ripple (XRP/USD), and Litecoin(LTCUSD), were not left out of the growth curve as they are seen hitting multi-days highs.
Currently, the US unemployment rate declined to 3.6%, and its Purchasing Manager’s Index averaged at 54.06 which indicates industry expansion and flourishing health of the manufacturing sector.
Nevertheless, Traders should brace themselves up for a period of high volatility as an increase in Non-farm Payroll will strengthen the USD while a decrease will weaken the USD.
In response to the news release, trade the financial market with the following trading instruments on the ACT Brokers platform(actmarkets.com), as they are mostly affected by the data release; BTC/USD, ETH/USD, XRP/USD, LTC/USD EURUSD, GBPUSD, XAUUSD, XAGUSD, XPTUSD, XPD/USD USDJPY, USDCAD, USDCHF, AUDUSD, NZDUSD, US30, US100, USOIL, US Oil, Facebook, Amazon, Tesla, etc.
Time Schedule for next NFP release:
Date: Friday 5th August 2022
Time: 1:30 pm (GM + 1)
Author: Amogo Solomon
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