On Friday, the US non-farming job sector expanded by 227,000 in November, exceeding market expectations by 27,000. This reading followed a 36,000 increase reported in October, revised up from 12,000.
The unemployment rate, however, inched slightly higher to 4.2% from 4.1% as forecast. Similarly, the Labor Force Participation Rate slipped to 62.5% in November, while the annual wage inflation, as measured by the change in the Average Hourly Earnings, stood at 4%, above the market projection by 0.1%.
Market reaction
Sensitive to this mixed bag of data, the US Dollar Index (DXY) skidded to 105.50 on Friday, losing 0.2% on the day.
EURUSD retreated to 1.0550 after testing 1.0600, yet still above the 20-day Simple Moving Average (SMA). This level appears to provide critical support despite the pullback. Yet, the outlook remains uncertain going forward and traders must remain risk-aware.
Gold prices dropped, serving as an indication of a stronger-than-expected job sector. Ending the week below $2,630 an ounce during the North American session, the yellow metal was pushed lower by an overall market sentiment leaning towards a potential interest rate cut by 25 basis points at the upcoming Fed meeting on 18 December.
Lower interest rates could be beneficial for gold as they’re likely to diminish investors’ interest in holding a low-interest-yielding asset and hence, increase liquidity. Yet, it remains to be seen.
In parallel, the WTI crude oil price fell 1% for the third consecutive day. Closing the week further below $68 per barrel, oil faced persisting selling pressure following OPEC’s decision to delay its normalisation output by three months. That was in line with market consensus as investors did not regard its effects as powerful enough to curb the current oversupply that the oil market is grappling with.
A similar declining reaction is broadly observed across US equities, with the Dow Jones Industrial Average (DJIA) losing 140 points, slumping into negative territory while its major counterparts tick higher on upbeat US job data.
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