Sentiment towards the US economy received an uplift during trading on Friday following the impressive NFP figure of 287k in June which displayed signs of US labor market resilience in a period of global uncertainty and instability.
For an extended period, data from the US has followed a positive trajectory, and today’s firm employment report displays the nation’s ability to shield itself from external downside risks. With US employment, inflation and GDP growth moving in the direction desired by the Federal Reserve, questions may now be asked if US rates could still be increased in 2016.
Although the persistent post-Brexit uncertainty has mixed with the toxic cocktail of events which have increasingly made it hard for the central bank to take action, the repeatedly improved domestic data has offered a glimmer of hope for the central bank to take action.
The previously depressed US dollar was unchained, with the Dollar Index surging towards 96.60 as expectations started to rise over a potential rate rise. This, combined with the improved sentiment towards the US economy, has offered a unique foundation for bullish investors to install another round of buying. If US economic data continue to follow the prerequisites needed for the Fed to take action, then the dollar could regain its glory days with the index surging higher towards 100.00.
Overall, today’s NFP results have provided the dollar bulls with a lifeline and bolstered confidence towards the stability of the US economy. Although this is still the era of central bank caution, the Federal Reserve could be one of the first central banks to break away from the hypnotic spell of global anxieties by raising US interest rates in the future.
Disclaimer: The content in this article comprises personal opinions and ideas and should not be construed as containing personal and/or other investment advice and/or an offer of and/or solicitation for any transactions in financial instruments and/or a guarantee and/or prediction of future performance. FXTM, its affiliates, agents, directors, officers or employees do not guarantee the accuracy, validity, timeliness or completeness of any information or data made available and assume no liability as to any loss arising from any investment based on the same.
Risk Warning: There is a high level of risk involved with trading leveraged products such as forex and CFDs. You should not risk more than you can afford to lose, it is possible that you may lose more than your initial investment. You should not trade unless you fully understand the true extent of your exposure to the risk of loss. When trading, you must always take into consideration your level of experience. If the risks involved seem unclear to you, please seek independent financial advice.