You can be forgiven for seeing a headline beat on the Non-farm Payrolls data and think that USD would rally. However, digging a little deeper into the Employment Situation report comes with a note of caution as the unemployment rate ticked higher.

Headline growth of +850,000 jobs in June decisively beat the +725,000 consensus forecast. However, despite this considerable upside surprise, the reaction has been positive for risk appetite and USD negative.

The data also contained an increase in the unemployment rate to 5.9% which was a considerable negative surprise to the 5.6% forecast. Furthermore, the Federal Reserve will be irked by the stubbornly sticky Participation Rate of 61.6% (61.6% last month). Before the pandemic, participation was consistently above 63%. This suggests there is still a large slug of the labor force that is yet to return to work.

This data represents a slight stutter in the argument put forward by the hawks on the FOMC.

We see this report as a little mixed. However, in the wake of the considerable strength in USD of recent days, it certainly gives traders the excuse to lock in some of those gains and take profits. Gold is also ticking slightly higher.

Furthermore, the reaction also seems to be bolstering stocks with Wall Street rising once more, as the S&P 500 continues to pull higher.