Unemployment in the US falls sharply


Labor market data known as Nonfarm payrolls, which was published a day earlier than usually – on Thursday, 2 July 2020 – due to U.S. Independence Day celebrations, caused a positive surprise. The reported data showed that there was an increase of 4.8 million jobs compared to the previous month, while analysts’ estimates indicated the maximum possible increase of about 2.9 million jobs. Overall, unemployment in the US has fallen to 11.1%, with estimates stating it could be as high as 12.4%.

Based on these facts, investors have regained confidence in the US dollar (USD) and even though its exchange value increase has been more modest so far, it has nevertheless increased compared to previous days. On 3 July, the value of the US dollar (USD), according to the US Dollar Currency Index (DXY) fluctuated and at 12:27 pm CET the USD was seen at 97.28 price level, with a slight decline of -0.04%.

However, despite the overall decline of the USD, its exchange rate against the single European currency, the Euro (EUR), increased on Friday, 3 July, and at 12:31 pm CET the EUR/USD currency pair traded on the Forex market at US$ 1.123 per EUR with daily strengthening of the USD by +0.08%. The USD also strengthened its exchange rate against the British Pound (GBP), when on 3 July at 12:33 pm CET, the GBP/USD currency pair traded at a mutual exchange rate of US$ 1,246 per GBP with daily strengthening of the USD by +0.072% of the exchange rate against the GBP.

In relation to the US labor market, Citgroup economists suggest that hiring will remain strong, although June could be a peak. They said that current forecasting models are too dependent on weekly receivables data, which is skewed because part-time workers can still get benefits. “A second consecutive large upside surprise to hiring relative to consensus confirms our view that the reopening rebound would be much more robust than most expected a couple months ago,” said Andrew Hollenhors, Citi economist. “We were particularly encouraged by the composition of hiring, which shows potential for further large gains in manufacturing, construction, and healthcare jobs, which are relatively insulated from social distancing,” added the Citigroup financial group economist in a note.


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