- The US dollar index declined after the Bureau of Labour Statistics released upbeat nonfarm payrolls numbers.
- The data showed that the economy added more than 4.8 million jobs in June after adding in 2.5M in May.
- The unemployment rate dropped to 11% from the previous 13.3%. Wages disappointed.
The US dollar index (DXY) is down by 0.25% as traders react to the upbeat nonfarm payrolls data released by the Bureau of Labour Statistics (BLS). The index is trading at $96.50, which is slightly below yesterday’s high of $97.20.
US nonfarm payrolls rise
The economy added more than 4.8 million jobs in June as the country started to reopen. That was the highest monthly gain ever recorded in history. The May jobs numbers were revised upwards from 2.5 million to more than 2.69 million.
The data released today was better than what most analysts were expecting. Economists had forecast an increase of about 3 million jobs. It was also slightly higher than the 2.3 million that ADP reported yesterday.
The U3 unemployment rate declined to 11.1%, slightly better than the previous 13.3%. Analysts were expecting the rate to decline 12.2%. This number measures the number of people of working age that is unemployed and actively looking for work.
Meanwhile, the U6 unemployment rate declined to 18% from the previous 21.2%. The U6 rate is usually seen as a better measure of unemployment rate because it includes the number of people marginally attached to the labour force.
The average hourly earnings declined from the previous 6.7% to 5.0% while the average number of hours declined from the previous 34.7 to 34.5.
There were signs that the economy would add more jobs. Retail sales numbers released in May rose by more than 17% and more businesses started to reopen. And yesterday, data from the US showed that manufacturing PMI rose to 52.2, the highest level this year.
Jobless claims rising
Meanwhile, data from the bureau showed that the number of Americans seeking first-time unemployment benefits rose to 1.42million jobs. The weekly claims have declined gradually from the peak of 6.8 million in March, at the peak of the coronavirus pandemic. Also, this was the eleventh consecutive weekly decline.
Continuing claims, which count the number of people actively seeking benefits, declined to 19 millionfrom the previous 20 million. The data came a day after the US government extended the Pandemic Unemployment Assistance program for several more weeks. Recipients of this program receive $600 every week from the government.
Still, the economy is facing its toughest test yet as the number of coronavirus cases continued to rise. The government confirmed more than 54,000 new cases yesterday, bringing the total number of infections to more than 2.74 million. And Anthony Fauci expects the cases to rise by more than 100,000 every day.
As a result, states have started to halt their reopening plans and companies like Apple and McDonalds have started closing their stores. As such, all this risks reversing the gains in employment made in the past few months.
US dollar index technical analysis
The US dollar index declined to an intraday low of $96.81. On the daily chart, the price has moved below the support of the bearish flag pattern I mentioned yesterday. The price is also below the 50-day and 100-day exponential moving averages. This means that the DXY is likely to continue falling as bears test the next support at $96.32.