Unemployment rate rising as investors dump US dollars, buy gold
As US unemployment ticks up to 4.1%, its highest since 2021, investors are moving away from the weakening US dollar and into gold, pushing prices near $2,400.
Key points
- Nonfarm Payrolls outperform in June, revised significantly lower in May
- Unemployment rate increases once again, hitting highest level since 2021
- US dollar witnessing continued weakness after soft PMI data earlier in the week
- Traders flock to gold on increased US economic uncertainty as prices near $2,400
Nonfarm Payrolls added 206k jobs in June
June's Nonfarm Payrolls (NFP) data outperformed expectations, adding 206,000 jobs compared to the forecasted 190,000. Despite this gain, there's a backdrop of concern as May’s initially reported 272,000 jobs were downwardly revised to 218,000, suggesting a potential softening in job growth momentum.
Highest US unemployment rate since 2021
The US unemployment rate took an unexpected uptick to 4.1% in June, marking the third consecutive monthly increase and the highest rate since November 2021. This trend could indicate emerging stresses within the labor market, which might influence future economic policies.
US dollar hits new low in major forex pairs
The US dollar has weakened significantly, reaching its lowest levels in weeks against major currencies such as the GBP, EUR, and AUD. Notably, the AUD/USD pair has climbed to its highest position since January 2024, reflecting the dollar's diminishing strength.
Gold prices smash $2,375 on lower interest rates
Amidst falling Treasury yields and continuous economic uncertainties in the US, gold prices have surged, approaching $2,400. This highlights gold's status as a safe-haven asset, often sought after in times of economic distress or when lower interest rates diminish currency values.
GBP/USD now trading above 1.2800
The GBP/USD exchange rate has risen above 1.2800, reaching a level not consistently seen since July 2023. This movement is significant given the brief spike above 1.3000 during that period, emphasizing shifts in currency strength and trader sentiment.
How to trade US dollar
- Open an account to get started, or practice on a demo account
- Choose your forex trading platform
- Open, monitor, and close positions on USD pairs
Trading forex requires an account with a forex provider like tastyfx. Many traders also watch major forex pairs like EUR/USD and USD/JPY for potential opportunities based on economic events such as inflation releases or interest rate decisions. Economic events can produce more volatility for forex pairs, which can mean greater potential profits and losses as risks can increase at these times.
You can help develop your forex trading strategies using resources like tastyfx’s YouTube channel. Our curated playlists can help you stay up to date on current markets and understanding key terms. Once your strategy is developed, you can follow the above steps to opening an account and getting started trading forex.
Your profit or loss is calculated according to your full position size. Leverage will magnify both your profits and losses. It’s important to manage your risks carefully as losses can exceed your deposit. Ensure you understand the risks and benefits associated with trading leveraged products before you start trading with them. Trade using money you’re comfortable losing.