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EUR/USD Sinks After US NFP Beat Expectations

August 7, 2020 (Last updated on August 8, 2020) by

EUR/USD was falling today, attempted to bounce after the release of US nonfarm payrolls but failed, and resumed the decline with an accelerated pace. While the jobs report was much better than expected, economists are worried that the sharp slowdown of employment growth means that the economic recovery is extremely fragile.

US nonfarm payrolls climbed by 1,763k in July versus the analysts’ median forecast of 1,530k gain. The previous month’s increase got a small negative revision from 4,800k to 4,791k. Unemployment rate fell to 10.2% from 11.1%, below the forecast level of 10.5%. Average hourly earnings rose by 0.2%, which was a nice surprise considering that markets were counting on a 0.5% drop. The June decline got a small revision from 1.2% to 1.3%. (Event A on the chart.)

Wholesales inventories dropped by 1.4% in June. That is compared with a 2.0% drop predicted by specialists and a 1.2% fall registered in the preceding month. (Event B on the chart.)

Consumer credit increased by $9.0 billion in June, less than economists had predicted — $10.0 billion. The May decrease got a revision from $18.3 billion to $14.4 billion. (Event C on the chart.)

Yesterday, a report on initial jobless claims was released, showing a decrease to a seasonally adjusted level of 1,186k last week from the previous week’s revised level of 1,435k. Experts had predicted a much smaller decrease to 1,410k. (Not shown on the chart.)

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