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Gold Sinks, USD/JPY Surges as NFP Report Smashes Expectations

Gold Sinks, USD/JPY Surges as NFP Report Smashes Expectations

2020-06-05 12:40:00
Rich Dvorak, Analyst
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NFP REPORT: GOLD PRICE PLUNGES & SPOT USD/JPY RIPS HIGHER AS JOBS GROW BY 2.5 MILLION IN MAY

  • US nonfarm payrolls report for May 2020 crushed the median estimate on Wall Street looking for -7.5 million jobs lost, but the actual figure crossed the wires at 2.5 million jobs added
  • USD/JPY price action spiked higher in response to the better-than-expected NFP report
  • Gold prices puked as the precious metal was pressured lower alongside other safe-haven assets like US Treasuries

An absolutely astonishing US jobs report just crossed the wires. Nonfarm payrolls added 2.5 million jobs last month as the American labor market attempts to claw its way back from April’s catastrophic NFP report. The latest NFP data smashed market expectations by 9.5 million seeing that the median economist estimate was looking for the US economy to shed, yes lose, 7.5 million jobs.

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Correspondingly, the unemployment rate actually fell to 13.3% from 14.7% previously reported. In response to the shockingly positive NFP report, safe-havens dropped considerably as upbeat trader sentiment accelerated S&P 500 and Dow Jones Index futures higher ahead of the New York opening bell.

US 500 BEARISH
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of clients are net long. of clients are net short.
Change in Longs Shorts OI
Daily 12% -2% 4%
Weekly 16% -6% 3%
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GOLD PRICE SPIKES LOWER, TEN YEAR TREASURY YIELD EXTENDS HIGHER

Gold Price Chart Ten Year Treasury Yield Reaction to NFP Report May 2020

Chart created by @RichDvorakFX with TradingView

The price of gold plunged 1% immediately after the stunning US jobs report crossed the wires. The precious metal’s move lower mirrored the spike higher in the 10-year Treasury yield, which is now perched above the 0.9% mark, after extending its rally to 270-basis points over the last five trading sessions.

Read More – Russell 2000 Bests Nasdaq Rally, Bonds Plunge on ADP & PMI Data

USD/JPY PRICE CHART: 1-MINUTE TIME FRAME (05 JUNE 2020 INTRADAY)

USDJPY US Dollar to Yen Price Chart Reaction to NFP Jobs Report May 2020

USD/JPY price action also exemplifies the rejuvenation of trader risk appetite following the encouraging NFP data. The US Dollar jumped nearly 50-pips, or about half a percent, against its anti-risk Japanese Yen peer. As such, spot USD/JPY made an explosive move off the 109.20-price level to the 109.60-handle.

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US Dollar performance gained ground across the board and pushed the US Dollar basket (DXY Index) into positive territory on the day. This follows seven-consecutive days of downside for the broader US Dollar with the USD recently hemorrhaging as GBP/USD & AUD/USD Soar, USD/CAD Sinks.

-- Written by Rich Dvorak, Analyst for FxNews.com

Connect with @RichDvorakFX on Twitter for real-time market insight

FxNews provides forex news and technical analysis on the trends that influence the global currency markets.

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