The Impulse Risk and Its Impact on Safe-Haven Assets: US Nonfarm Payrolls Report and Market Analysis
US Nonfarm Payrolls Report Exceeds Expectations, Wall Street Remains Unaffected
The release of the May Nonfarm Payrolls report by the US Department of Labor surpassed estimates, revealing a significant increase in job creation. Despite this positive employment data, safe-haven assets faced downward pressure due to the prevailing risk-on sentiment in the market. Wall Street, however, seemed unaffected by the report, showing resilience to the optimistic figures.
US Treasury Bond Yields and Dollar Index React
In response to the Nonfarm Payrolls report, US Treasury bond yields experienced an upward surge. The 2-year Treasury bond yields jumped 16 basis points to reach 4.501%, while the 10-year yields rose by nine basis points, reaching 3.689%. Simultaneously, the US Dollar Index demonstrated a 0.43% increase, standing at 104.026. This upward movement marked a potential end to three consecutive weeks of gains, positioning the index for its first weekly loss.
Speculation on US Federal Reserve's Rate Decision
Market speculations surrounding the upcoming Federal Reserve meeting suggest that interest rates will remain unchanged in June. However, it is widely anticipated that the central bank will raise rates by 25 basis points in July. These expectations contribute to the overall market sentiment and influence investors' decisions.
Debt-Ceiling Bill Approval Impacts US Bond Yields
Following the approval of the US debt-ceiling bill by both the House and Senate, US bond yields experienced a decline. The resolution of this legislative concern alleviated market uncertainty, resulting in a drop in bond yields. The bill is expected to be signed into law by President Joe Biden during the weekend, bringing an end to this prolonged issue.
XAU/USD Price Analysis and Technical Outlook
The XAU/USD (Gold spot) exhibits a neutral to downward bias, despite trading above the 200-day Exponential Moving Average (EMA) at $1886.98. Recent price action indicates a series of lower highs, potentially indicating a shift in market sentiment toward the downside.
Technical indicators such as the Relative Strength Index (RSI) and the 3-day Rate of Change (RoC) support the notion of sellers dominating the market. A decisive break below the $1950 level could strengthen their position and challenge the 200-day EMA.
Key Support and Resistance Levels for XAU/USD
In terms of support levels, the initial barrier for XAU/USD stands at $1950, followed closely by the 100-day EMA at $1936.30. Once these levels are breached, the next significant support lies at $1900. On the other hand, the first resistance level for XAU/USD is the 50-day EMA at $1970.78, closely trailed by the 20-day EMA at $1972.86. Potential upside risks can be observed around the $2000 mark.
By analyzing the US Nonfarm Payrolls report, the reaction of US Treasury bond yields and the US Dollar Index, as well as the impact of the debt-ceiling bill approval, it becomes evident that the current market sentiment favors riskier assets. Meanwhile, the XAU/USD faces downward pressure and is positioned at critical support and resistance levels, providing valuable insights for investors in the precious metals market.