XAG / USD barely changed in the $ 22.20 area after the NFP headline missed forecast

• Spot silver prices were unsettled after the NFP, but have barely changed from the previous data in the USD 22.20 area.
• US job gains have missed expectations, but measures taken in the doldrums indicate an improving and strained job market.

Spot silver prices (XAG / USD) have had a confused, two-way reaction to the latest US employment report. Spot prices fell below the $ 22.00 level at times, but have since bounced back to pre-data levels near $ 22.20 after printing session highs of just under $ 22.30. For reference, the US headline job gains disappointed, but the downturn measures showed that the US labor market continues to make headway towards full “short-term” employment (that is, taking full advantage of the workforce that is actually willing to give up work ). Hence, the money market implied the likelihood that the Fed would hike rates by 25 basis points in March, from 80% before the release to 90%.

Given the mixed nature of the report, and as traders continue to digest what this means for the outlook for Fed policy, the forex and bond markets are not very volatile. If anything, the dollar is a little weaker as the DXY is currently testing the 96.00 level. In the meantime, the US 5 and 10 year TIPS returns (real) are unchanged in the respective areas of -1.34% and -0.77%, which are roughly in line with the previous data. From a correlation point of view, it therefore makes sense that the data for precious metals has not yet been extended much.

While silver appears to have weathered the NFP unscathed (to the surprise of some), it may be too early for the bulls to end this week’s selling pressures as three Fed speakers will speak later this afternoon. Fed’s Mary Daly comes first at 1500 GMT, followed by comments from Fed’s Raphael Bostic at 1715 GMT and Thomas Barkin at 1730 GMT. The tone of their remarks will likely reflect the restrictive protocols, with FOMC participants appearing to be of one mind on most aspects of monetary policy. Bond yields rose wide for the week to price in a more restrictive Fed and at current levels, XAG / USD is expected to close the week nearly 5.0% lower. Perhaps that limits the scope for further losses. If not, a break below $ 22.00 would open the door to a test of the December lows around $ 21.40.