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EUR/USD Reverses Gains, Drops Sharply After Positive Surprise from US NFP

June 5, 2020 by

EUR/USD was rising at the start of Friday’s trading session but has reversed its movement during European trading hours and dropped sharply after the release of surprisingly good US employment data.

Nonfarm payrolls climbed by 2,509k in May. That was an extremely positive surprise considering that specialists had predicted a drop by 7,750k. The April drop got a revision from 20,537k to 20,687k. Unemployment rate fell from 14.7% to 13.3% — another positive surprise as the median forecast promised an increase to 19.4%. Average hourly earnings were the only part of the report that provided a negative surprise, falling by 1.0% instead of rising at the same rate as analysts had predicted. Wage inflation was at 4.7% in April. (Event A on the chart.)

Consumer credit fell by $68.7 billion in April. It was a much bigger drop than the one predicted by experts — $20.0 billion. Consumer credit fell by $6.9 billion in March — a significant positive revision from a drop of $12.1 billion. (Event B on the chart.)

Yesterday, several reports were released (not shown on the chart):

Seasonally adjusted initial jobless claims fell to 1,877k last week from the previous week’s revised level of 2,126k (2,123k before the revision) but were above the consensus forecast of 1,820k.

Nonfarm productivity fell by 0.9% in Q1 2020 while market participants were expecting the same 2.5% drop as in the previous three months.

Trade balance deficit widened to $49.4 billion in April from $42.3 billion in March while economists had predicted a decrease to $41.5 billion.

If you have any comments on the recent EUR/USD action, please reply using the form below.

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