US dollar, energy prices, and stocks tumble as recession fears hit markets

The EUR/USD currency pair surged on Friday as the US Dollar weakened following disappointing Nonfarm Payroll (NFP) figures. Concerns about a potential economic slowdown in the US have heightened, triggering a broad risk-off sentiment across global markets. The weaker-than-expected US data led to a significant decline in the US Dollar.

The US added only 114,000 new jobs in July, significantly below the forecasted 175,000. Additionally, June's job gains were revised down to 179,000 from the initially reported 206,000. The unemployment rate rose to 4.3%, the highest since November 2021. Average Hourly Earnings grew by just 0.2% month-over-month, missing the expected 0.3%. Year-over-year wage growth slowed to 3.6%, down from 3.8%.

ISM Manufacturing PMI is scheduled for release on Monday, this index is expected to rise to 51.0, signalling a return to expansion compared to June's contractionary reading of 48.8.

Gold prices traded between gains and losses on Friday and despite moderate daily losses the week closed positive with prices increasing more than 2% in a weekly basis.

The yellow metal benefited from safe haven demand after a raft of disappointing U.S. economic readings- especially on manufacturing activity and the labor market- pushed up concerns that the world’s biggest economy was slowing faster than initially expected.

This sparked a massive selldown across most risk-driven markets, especially in equities, Treasuries and foreign exchange, in turn fueling safe haven bets for the yellow metal.

The prospect of a weaker economy also saw traders pricing in the potential for deeper interest rate cuts by the Federal Reserve, which recently signaled that a September rate cut was possible.

Oil prices ended sharply lower on Friday, marking the fourth consecutive week of losses. The decline was driven by weaker-than-expected U.S. jobs data, which heightened fears of slowing economic growth and its potential impact on oil consumption.

Concerns about demand were exacerbated by the expected increase in U.S. crude oil production, projected to rise by 500,000 barrels per day this year.

Earlier in the week, oil prices were influenced by potential supply disruptions stemming from heightened tensions in the Middle East. The region remains a focal point due to concerns about a broader conflict, especially after Iran threatened retaliation against Israel following an alleged assassination of Hamas leader Ismail Haniyeh.

U.S. stocks experienced a sharp decline for the second consecutive session on Friday, with the Nasdaq Composite officially entering correction territory. This downturn was driven by a weaker-than-expected jobs report, heightening fears of a potential recession.

he Labor Department reported that nonfarm payrolls increased by only 114,000 jobs in July, significantly below the forecasted 175,000. Economists had suggested that at least 200,000 new jobs are needed to keep pace with population growth. Additionally, the unemployment rate rose to 4.3%, nearing a three-year high.

The disappointing jobs data has led to increased speculation about an upcoming rate cut by the Federal Reserve. Expectations for a 50 basis point cut at the Fed's September meeting surged to 69.5%, up from 22% in the previous session, according to CME's FedWatch Tool. Market sentiment shifted, with investors now questioning whether the Fed delayed rate cuts for too long and whether a recession is imminent.