NFP React: Stocks higher, Dollar crushed, Oil eyes $100, Gold surges, Bitcoin above $21k


US stocks went on a rollercoaster ride after another strong labor report. Stocks are rallying as Wall Street believes the Fed is on the right to bring inflation down. This nonfarm payrolls report was mostly hot; a strong headline number, upward revisions, and further wage growth. ​ What was surprising was the jump higher with the unemployment rate, but when you factor in we had a surprise drop in September, it doesn’t look so significant.

There are a lot of signs that support the labor market will continue to soften here. ​ Service sector hiring has some cracks and that should weaken going forward.

This labor report allows Fed Chair Powell to stick to the hawkish script for a while and still support the idea of a downshift in tightening for the next policy meeting. Unless next week’s inflation report is a scorcher, the Fed will opt for a slower rate pace of rate increases. ​ ​ ​ ​


The labor market is slowly weakening here. ​ An impressive NFP headline of 261,000 jobs created in October was also accompanied by an increase in the unemployment rate from 3.5% to 3.7%. ​ Wage growth did not ease up at all and that should keep the Fed rhetoric remaining hawkish.

The economy is just starting to feel the Fed’s first round of rate hikes which means they might have to remain hawkish going into the spring. Fed swaps are expecting the policy rate to rise to 5.25% in June and that is the line in the sand for risk appetite. ​ If the next couple of inflation reports are surprisingly hot, risk appetite could see a violent selloff.


The dollar is getting crushed here as Wall Street is growing confident they finally identified the peak in the terminal rate. ​ It seems markets are pricing in a Fed that will slowly take rates to 5.25% and that has put a key top in the dollar. ​ The dollar is having its worst day since March 2020 and that could continue if next week’s inflation report does not come in scorching hot. ​


The oil market shouldn’t expect a lot of new wells as oil and gas extraction jobs only rose by 400 in October. ​ $100 oil is coming as the US service sector labor market remains robust and on expectations supplies will remain tight. Oil rallied earlier on further speculation that China is about to tweak their pandemic rules. Chinese crude demand has been capped and if that roars back, that alone could send oil prices 5% regardless of global economic slowdown fears. ​

There are too many geopolitical risks on the table that should keep oil’s trajectory higher. ​ If the dollar continues to slide here, oil’s strength could be relentless.


Gold prices are pushing higher despite a strong labor market report. Gold’s initial NFP reaction was a spike lower as the two-year Treasury surged to a multi-year high. ​ The initial glance of the NFP report was that both hiring and wages remain hot and that could have the Fed take rates to 5.25%. ​ After Wall Street digested the NFP report, yields and the dollar reversed. ​ The Fed appears to be on the right path for fighting inflation and that will lead to a weaker economy early next year.

The long variable lags of Fed tightening has traders convinced they opt for a slower pace of hikes and decide later on when to stop.

If next week’s inflation report contains a downward surprise, gold might be able to make a run towards the $1700 level.


Range traders must love crypto. ​ Bitcoin remains anchored above the $20,000 level. ​ Today’s employment report triggered a wave of volatility that ended up being positive for risky assets, which has helped Bitcoin rally above the $21,000 level. ​ A downshift to a slower pace of tightening still seems in the cards for the Fed and that should provide some short-term support for cryptos. ​ ​

This article is for general information purposes only. It is not investment advice or a solution to buy or sell securities. Opinions are the authors; not necessarily that of OANDA Corporation or any of its affiliates, subsidiaries, officers or directors. Leveraged trading is high risk and not suitable for all. You could lose all of your deposited funds.

With more than 20 years’ trading experience, Ed Moya is a senior market analyst with OANDA, producing up-to-the-minute intermarket analysis, coverage of geopolitical events, central bank policies and market reaction to corporate news. His particular expertise lies across a wide range of asset classes including FX, commodities, fixed income, stocks and cryptocurrencies.

Over the course of his career, Ed has worked with some of the leading forex brokerages, research teams and news departments on Wall Street including Global Forex Trading, FX Solutions and Trading Advantage. Most recently he worked with, where he provided market analysis on economic data and corporate news.

Based in New York, Ed is a regular guest on several major financial television networks including CNBC, Bloomberg TV, Yahoo! Finance Live, Fox Business and Sky TV. His views are trusted by the world’s most renowned global newswires including Reuters, Bloomberg and the Associated Press, and he is regularly quoted in leading publications such as MSN, MarketWatch, Forbes, Breitbart, The New York Times and The Wall Street Journal.

Ed holds a BA in Economics from Rutgers University.

Ed Moya

Ed Moya


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By Ed Moya