Dollar strengthens

By Tusi Heydarov

After the announcement of the number of new jobs created in the Non-Farm Sector (NFP) in the US exceeding forecasts, the dollar index began to rise rapidly.

The number of new jobs created in the Non-Farm Sector (NFP) in the US for May was announced with an increase of 272,000, significantly exceeding the forecasted increase of 185,000. Additionally, the employment increase for April was revised down from 175,000 to 165,000. On the other hand, last month's unemployment rate, although expected to remain neutral, rose to 4.0%, which can be interpreted as a sign that the economy is starting to slow down.

Even though other labor market data released during the week indicated signals that the US economy was cooling, the increase in the NFP was interpreted as a “surprise.” Among the other data released, Average Hourly Earnings increased by 0.4% on a monthly basis and by 4.1% on an annual basis. The indicator was forecasted to be announced as 0.3% and 3.9%, respectively. Despite the increase in employment, the unemployment rate rose from 3.9% to 4%.

The dollar rises after the labor market report

After data showed a greater-than-expected increase in the US economy in May, the dollar index quickly moved from 104 points to 105 points, recovering its weekly losses.



Although EUR/USD tested the $1.09 resistance level several times this week, it dropped to $1.0820 after the data was released. GBP/USD tested the $1.28 level today but fell back by approximately 1 cent to $1.2710. USD/JPY appreciated more sharply, with the daily depreciation of the Japanese yen reaching 0.74%, and the parity rising to 157 yen.

Amid the labor market report exceeding forecasts, downward volatility was also observed in cryptocurrency exchanges.

Bitcoin, after dropping from the $72,000 level to $70,600 in the last hour, found balance at $71,350. Ethereum balanced around $3800 after declining to $3770. While approximately 1.8% volatility was observed in the total value of cryptocurrency markets after the data, the initial reaction was limited.

Tusi Heydarov, is the head of the Education and Analysis Department at Invest-AZ Investment Company CJSC.

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