The August Nonfarm Payrolls (NFP) release delivered a major downside surprise: only +22,000 jobs vs. +75,000 expected, while the unemployment rate edged up to 4.3%, the highest in over a year.
Revisions were just as damaging: nearly 1 million jobs were erased from prior estimates, amplifying doubts about U.S. labor market resilience.
Impact on USD and Rates
The weak data has reshaped Fed expectations. Markets now see a September rate cut as certain, with an active debate between a 25bp vs 50bp move. The Dollar Index slipped to a 7-week low, reflecting this policy shift.
For traders, the message is clear: the “higher for longer” narrative no longer holds. Weak labor data has turned into a liability for the greenback.
Cross-Asset Divergence
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Precious metals rallied strongly on USD weakness and lower yields.
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Crude oil ignored the softer dollar, sliding instead on demand fears and a +2.4m barrel U.S. inventory build.
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FX majors (EUR/USD, GBP/USD, USD/JPY) extended gains as dollar sentiment weakened across the board.
This divergence highlights a key nuance: in the current environment, macro demand signals override FX dynamics for commodities.
Trading Outlook
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A 25bp cut in September is nearly priced in.
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A 50bp cut would accelerate the dollar’s decline and reprice risk assets more aggressively.
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Watch for further revisions and labor participation metrics in upcoming data — any additional weakness will strengthen the dovish case.
Bottom Line
The NFP shock has pushed the dollar to fresh lows, reignited debate on Fed policy, and created sharp divergence across asset classes.
For traders on MQL5:
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USD bias remains bearish into the Fed meeting.
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Gold/silver supported.
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Oil weak despite dollar softness — demand story dominates.
This analysis reflects a personal view for educational purposes only and is not financial advice.
