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US job growth boosts market, US Dollar

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US job growth boosts market, US Dollar

One of the chief takeaways of last month’s FOMC policy announcement was the importance of job growth on US monetary policy. As a chief indicator of a healthy and growing economy, employment figures are being monitored closely by market participants looking to determine the status of US recovery. On Friday US job figures took centre stage, as June nonfarm payroll data made headlines. The market was delighted to learn that the US economy added 195,000 jobs, beating expectations of 165,000. Hourly wages in the year ended in June also increased by 0.4 percent, the highest advance in two years.

US job growth wasn’t enough to improve the unemployment rate, which held firm at 7.6 percent, but was enough to send the stock market soaring for the second straight week. The S&P 500 advanced more than 1 percent to close the New York session at 1,631.89, while the NASDAQ Composite rose by close to 1 percent to reach 3,479.38. The Dow Jones Industrial Average also advanced close to 1 percent to 15,135.84. Positive employment figures are generally supportive for earnings growth, reassuring investors that they are investing in a healthy market. Friday’s stock market performance was indicative of this sentiment.

The positive jobs report also supported the US dollar following an idle Independence Day. On Friday the greenback was stronger across the board, surging 0.54 percent against the Canadian dollar to settle at 1.0575 at the end of New York trade. USDJPY advanced by close to 1 percent to break the 100 threshold, settling at 100.9450. The greenback also advanced 0.63 percent against the euro, sending EURUSD back down to 1.2830.

Economic growth amid Fed stimulus has created a highly bullish market for US equities and its chief currency. With each passing day, monetary stimulus appears less necessary, as investors eye the eventual end to the Fed’s $85 billion monthly bond purchasing program. US recovery could appear brighter next week with the release of key economic data and last month’s FOMC meeting minutes.

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