The US employment data released on Friday turned out to be unexpectedly positive, interrupting a two-month period of publication of openly negative values on the number of new jobs.
In particular, the US economy received 850,000 new jobs in June against 583,000 in May and the forecast of 700,000. However, unemployment also increased to 5.9% against the expected decline from 5.8% to 5.7%. The figures for the average hourly wage were also disappointing. Its June growth declined from the revised value of 0.5% to 0.4%, to 0.3%. There is also a reduction in the length of the working week from 34.8 to 34.7, although an increase to 34.9 was expected.
Given the economic statistics presented last Friday, we can say that the sharp growth in the number of new jobs is most likely a delayed effect of the low growth in the previous two months and not an overall improvement in the situation. The decrease in the employment rate and the decrease in the length of the working week clearly show this. It will be really possible to talk about something in positive tones if such dynamics continue, namely, a smooth increase in the number of new jobs in the next few months, and a decrease in the unemployment rate.
In general, the stock market in the United States and in Europe reacted positively to the figures of the US labor market, but this growth was of a cautious nature precisely for the reason described above. Investors do not risk fully buying many shares of companies, fearing that any pitfall will cause them to sharply decline, causing a downward correction. Stock indexes update the highs every time, but they are somewhat reassured by the confident purchases of US Treasury government bonds, which pushes their yields down. Here, the yield of the benchmark 10-year Treasuries slip to 1.459% last week. The 2-year notes, which are sensitive to the prospects for changing the Fed's monetary policy, also turned down and was declining earlier by 0.17%, namely to 0.2376%.
It can be said that the markets have somewhat calmed down, but they are trying to be alert. We believe that cautious optimism will prevail in the stock markets in this situation.
As for the currency market, the US dollar received local support on Friday, but improved market mood and increased demand for US stocks, paired with a decline in Treasury yields, led to its weakening. If such a mood persists, its limited decline will continue.
Forecast of the day:
The EUR/USD pair found support just above the level of 1.1800. If the market mood remains positive and the pair rises above 1.1885, a limited growth to 1.1930 can be expected.
The USD/CAD pair is trading above the level of 1.2300. The resumption of growth in crude oil prices and pressure from the growth of Treasury yields on the US dollar may lead to the pair's decline to 1.2230. Technically, it should fall to the level of 1.2300.
