September Nonfarm Payrolls Far Exceed Expectations! Gold Plunges $18, US Dollar Surges 60 Points!
The US Department of Labor released the September nonfarm employment report, showing an increase of 254,000 nonfarm jobs, exceeding market expectations of 140,000 and marking the largest increase since March 2024. The unemployment rate fell to 4.1%, a new low since June 2024, while annual wage growth rose to 4.0%, a new high since May 2024. This series of data exceeded market expectations, making investors optimistic. With the release of this data, market expectations for a Fed rate cut have changed significantly. The US Dollar Index (DXY) immediately rebounded by 60 points, breaking through the 102 mark. Spot gold plunged $18 in one minute, falling to $2640, then slowly widening its losses.
Time:
2024-10-04 21:01
Friday, October 4th, 8:30 PM Beijing time, United States The Department of Labor released the September Nonfarm employment report, showing that nonfarm payroll employment increased by 254,000, exceeding market expectations of 140,000. This is the largest increase since March 2024. The unemployment rate fell to 4.1%, the lowest since June 2024, while annual wage growth rose to 4.0%, the highest since May 2024. This series of data exceeded market expectations, making investors optimistic.
Nonfarm payroll employment in July was revised from 89,000 to 144,000; in August, it was revised from 142,000 to 159,000. After revision, the total number of new jobs in July and August was 72,000 higher than before the revision.
Among major worker groups, the unemployment rate for adult men (3.7%) decreased in September. The unemployment rates for adult women (3.6%), teenagers (14.3%), whites (3.6%), blacks (5.7%), Asians (4.1%), and Hispanics (5.1%) remained virtually unchanged.
With the release of this data, market expectations for the Federal Reserve interest rate cuts have changed significantly. US dollar index (DXY) immediately rebounded 60 points, breaking through the 102 mark. Spot gold plummeted $18 in one minute, falling to $2640, then slowly widening its losses.
British pound against the US dollar (GBP/USD) fell below 1.31, down 0.19% for the day. Euro against the US dollar (EUR/USD) fell by 0.50% during the day, currently at 1.0974. Australian dollar against the US dollar (AUD/USD) fell by more than 0.50% during the day, currently at 0.6806.
The yield on the US 10-year Treasury note reached its highest level since August after the release of the nonfarm employment data, currently at 3.959%; the two-year US Treasury yield rose to 3.876%.
Changes in Federal Reserve policy expectations
Traders expect less than 100 basis points of rate cuts from the Federal Reserve over the next four meetings.
Analysts generally believe that the strong nonfarm employment data will cause the Federal Reserve to adopt a wait-and-see attitude at the upcoming meetings, thus delaying the possibility of a rate cut. David Meger, director of metals trading at High Ridge Futures, noted: "If the market believes the Fed is more likely to maintain current interest rates, this will put pressure on gold and could cause gold prices to fall."
US short-term interest rates futures fell as traders expected the Fed to reduce rate cuts after the release of the September nonfarm payroll data. Following the strong employment data, traders further bet that the Fed will stick to a 25 basis point rate cut in November and December. This change will affect market sentiment towards the dollar; strong employment data means that the US economy is recovering well, which may weaken demand for gold.
Analyst Dhwani Mehta pointed out that the downside risk for gold prices still exists at this stage, and if it falls below $2623, it may further approach $2600.
Impact of geopolitical factors
Meanwhile, tensions in the Middle East geopolitical situation continue to affect market sentiment. US President Biden said on Thursday that he is considering taking action against Iran, further exacerbating market uncertainty. Ajay Kedia of Kedia Commodities said: "As long as geopolitical risks do not ease, gold prices are expected to remain high, but strong nonfarm employment data may weaken this safe-haven demand."
In summary, the strong performance of US nonfarm employment data in September will affect the Federal Reserve's policy expectations, potentially leading to a stronger dollar in the short term, while gold faces some pressure. Traders need to closely monitor subsequent data changes to adjust their investment strategies.
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