The latest US Nonfarm Payrolls (NFP) report has delivered a weaker-than-expected signal, with job creation falling below 100,000. The unemployment data also adds to the picture of a labour market that is losing some momentum. This creates additional pressure on the Federal Reserve as policymakers assess their next interest-rate decision. With employment growth weakening, the case for keeping monetary policy restrictive becomes more difficult.
October Rate-Hike Expectations Decline
Following the release, investors are increasingly forecasting that the Federal Reserve will hold interest rates in October, while expectations for another rate hike have weakened. This shift in rate expectations is now becoming an important driver of market sentiment.
USD Weakness, Gold Opportunity
The US dollar sentiment has weakened following the employment data, while gold has gained a more supportive fundamental backdrop.
With the probability of an October rate hike declining, gold could have a stronger opportunity for further upside. From a technical perspective, traders can focus on short-term buy setups from stronger demand zones, while waiting for a clear Change of Character (CHoCH) before entering.
Keep an Eye on Oil
However, there is another factor traders should not ignore.
Markets have recently been showing a strong correlation with oil prices. Any major movement in crude oil could influence inflation expectations, bond yields, the dollar, and ultimately the Fed’s policy outlook.
NFP has changed the short-term narrative. but the next move still needs confirmation. Watch interest-rate expectations, oil prices, and price action before taking the trade.