NFP, what just happened?

Disappointing numbers and Market reaction

By: Ahura Chalki

Market analyst – IFC Markets

As we used to hear from FOMC members in the last few days, it is soon to talk about asset purchase reducing or increasing the interest rate at any time this year, after reading such disappointing employment data. 

US NFP report showing only 266Knew job in April, on top of downward revisions. Furthermore, these numbers will do nothing other than encouraging the FED to keep the rates at the current low levels and continue bond purchasing as long as it is needed to get the labor market to the normal situation, as they said before. 

On the other hand, the released numbers are so much more disappointing to accept that it was the effect of seasonal adjustments. Moreover, it can be more disappointing when we see the difference between the expectations of over 1 Million with only 266K actual number—when we see the downside revision for March also at 777K instead 916K, it can add the worries in the market. 

A second look at what just happened brings another theory also to the spotlight. Mega stimulate packages and Cash cheques can be a discouragement for labor markets to search for new jobs and businesses to start activities since government helps bring them overconfident for time to restart, as Republicans used to say, time opposition approval of these packages. 

Therefore after published numbers, FED is set to hold the rates lower for a longer time, and it can be hurting for USD, but heating the stock markets. 

Market Reaction – DJI

DJI in the daily chart shows a clear uptrend since January 2021, while never used to be traded stable above 70 RSI level or break the OBV trend line. Moreover, the critical element also is the position of candles relative to the 20 DMA; never get too far or lower than that. Today, Dow Jones 30 printed a new record high at its second resistance at 34,812. Continuing the current uptrend will put the 35,060 as a third resistance as a target. 


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