The price action so far today is emblematic of a textbook “risk off” day: stocks are falling across the globe, oil is trading off by nearly 3%, bond yields are generally retreating, and the yen is the strongest performing major currency (though we would note that gold bugs still can’t seem to catch a break!).
As we noted yesterday ahead of today’s NFP release, “[There have been] no signs that a pickup in price pressures is imminent, [and therefore] the Federal Reserve is content to stick with its gradual, every-other-meeting rate hike schedule…”. Today’s U.S. jobs report will do little to blow the Fed off course.
Total nonfarm payroll employment rose by 157,000 in July, and the unemployment rate edged down to 3.9%, the U.S. Bureau of Labor Statistics reported today. Employment increased in professional and business services, in manufacturing, and in health care and social assistance.
Before this eventful week is over, there’s just the small matter of the U.S. monthly employment report to consider. Ahead of the release of the nonfarm payrolls data, the US dollar has regained its poise slightly, although it still remains stuck inside the one-month-old range. Could the NFP cause it to finally break out in one or the other direction? The U.S. Department of Labor will report on Friday at 13:30 BST or 08:30 EDT the number of jobs added to the U.S. economy in July, the unemployment rate, and key wage growth figures.
The U.S. dollar fell against major pairs on Friday despite a strong June jobs report due to the impending start of tariffs against Chinese goods and the retaliation from the Asian nation on U.S. exports. The U.S. economy added 213,000 jobs and wages rose 0.2% but it is the threat of trade war escalation that put pressure on the U.S. currency.
The mixed-bag U.S. jobs report on Friday caused the dollar to weaken further, allowing the likes of the euro/U.S. dollar and the Aussie dollar/U.S. dollar currency pairs to push higher, while buck-denominated gold also got a boost. The U.S. dollar/Canadian dollar currency pair, meanwhile was hit with a double whammy as it not only fell on the back of the NFP report but the Canadian dollar also got a boost from the stronger Canadian employment figures.
After President Trump spoiled “traders’ Christmas” last month with a now-infamous tweet implying that the May jobs report would be strong, market participants were happy to get back to their “normal” tradition of overanalyzing and excessively dissecting the volatile monthly jobs report at the moment of its release today.
Total nonfarm payroll employment increased by 213,000 in June, and the unemployment rate rose to 4.0%, the U.S. Bureau of Labor Statistics reported on Friday, July 6. Job growth occurred in professional and business services, manufacturing, and healthcare, while retail trade lost jobs.
U.S. investors, out celebrating July 4 holidays, didn’t miss much at all yesterday in the markets. They are back today and with them, volatility is set to return. In fact, European stock markets have started sharply higher this morning although the forex markets have been fairly quiet so far as investors await key U.S. data releases later on in the afternoon, which should provide us vital clues about Friday’s key employment report. Depending on the outcome of today’s data, the dollar could start to move more meaningfully ahead of the jobs report on Friday.
This has certainly been a rollercoaster trading week for financial markets thanks to geopolitical uncertainty and renewed trade war fears. Easing political tensions in Italy have rekindled risk appetite, ultimately resulting in global equity markets venturing higher.