That’s exactly what we saw in May, an extraordinary apparent US labor market strength. Climbing nonfarm Payrolls were up 139,000, above the market’s forecast of 130,000. On Friday, the US Bureau of Labor Statistics provided some positive news. It’s further proof that job growth is continuing at a remarkable clip in the face of profoundly anti-growth headwinds. With the unemployment rate holding steady at 4.2%, that’s another sign things are looking stable in the labor market.
This continuing surge in Nonfarm Payrolls is painting a rosy picture of a robust labor market. That’s a clear indication that we’re still on the mend from the pandemic’s effects. Such robust growth should help to ease fears of economic recession and rising inflationary headwinds. Analysts tend to look at the data positively since it reflects that even amid all the uncertainty in other sectors, businesses are continuing to add jobs.
In the wake of the employment report, the US Dollar was remarkably strong across the board. Traders would respond with relief after some strong labor market numbers raised confidence in the dollar’s strength. In the currency market, the EUR/USD pair of the single currency lost ground, trading under the 1.1400 handle in the last hours of the Friday session. Likewise, GBP/USD stayed in the dog house too, trading just under 1.3550 as traders weighed the impact of the strong US jobs data on currencies.
The dollar’s renewed strength played a direct role in dragging gold prices lower. XAU/USD, or gold, came down under heavy pressure and was trading a little under $3,350 in the American session. As a general rule, a stronger dollar spells bad news for gold prices. This trend is indicative of how quickly investor sentiment can turn away from riskier assets.
In an amplified reaction to the above, electric vehicle producer Tesla (TSLA) had the mother of all sell-offs. The stock tanked $46 or 17%, closing below $274. TSLA shot over $332 on Wednesday only to plummet after that. This underscores the sensitivity shown by the tech sector in terms of stock price movement as investors react to all large economic data releases.