US NFP for June came showed 80K jobs added, a slight improvement from the upwardly revised 77K for May. This undershoots forecasts of 97K.
The conventional wisdom, which really sounds counter-intuitive, is that poor data can bring about heightened QE expectations. However, we know that Bernanke is reluctant in pulling the trigger for QE a 3rd time. Its like a drug, each fix comes with less effect, with inflation as a foreseeable side-effect.
80K, is bad as it shows the snail pace recovery of the US economy. But it is not terrible like a negative reading or below 50K reading, so it did not flame QE expectations.
It is said that we need a good string of months above 200K to sustain a healthy recovery in the US economy. However we have had 4 straight months under 200K, and 3 straight months under 100K. However, the fact it has not continued to fall shelves urgent expectation of QE.
The unemployment rate for June remained at 8.2%.
The reaction in gold reflects the initial pricing in of more QE, but a non-commitment of that idea. As the 15-minute chart shows, an initial push toward 1610 was rejected and the market fell back below 1600 to about 1585 within the subsequent hour after the release.
Gold 15 minute chart 9:40 AM EDT (7/6)
Fan Yang CMT is a forex trader, educator and Chief Currency Analyst of FXTimes – provider of Forex News, Analysis, Education, Videos, Charts, and other trading resources.
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