Friday’s release of one of the most crucial items in the monthly Forex economic calendar, the Non-Farm Payrolls data, came in below expectations.
The number was particularly disappointing as the headline forecast released 24 hours previously suggested that the number was more likely to come in significantly above expectations than below. The Non-Farm Payrolls number tells us how many net jobs were created during the previous month, and as such is a crucial gauge of the strength of (or “heat in”, if you prefer) the U.S. economy.
Thursday’s forecast was for a net addition of 253,000 jobs compared to a market consensus of 181,000. Friday’s real number showed a net addition of only 138,000 which is a significant undershoot. The U.S. Dollar gained on Thursday but then following Friday’s number fell steadily, with the Euro, Swiss Franc, Gold and Japanese Yen the prime beneficiaries. Attention is particularly focused on the Euro, which closed May at a 1-year high close price. It is interesting how the four currencies often seem to move as a bloc when anything happens to change perception of the U.S. economy or currency. They seem to have become a new “safe-haven” group.
One of the most interesting aspects of the post-release market movement was in the stock market, of which the S&P 500 Index can be used as a wide-ranging benchmark measurement. The Index initially fell by about 0.4% before recovering to close the week at a higher price, making a new all-time high after the disappointing figure was released! There’s been a lot of fearful talk about the U.S. stock market in recent months, but I trade what I see, and I see new all-time high prices on disappointing U.S. news. That’s a classic bullish sign. Of course, that doesn’t mean that the market won’t crash – mature bull markets in stocks can suffer very sudden and sharp falls. Yet meanwhile, stock market bulls continue to make money.