Forex Afternoon Wrap – 02/07

Jul 02, 1:12 pm
November 18th

US June payrolls a mixed bag! Dollar Index on shaky ground

Key Notes:

  • Japan Monetary base y/y 34.2% vs. 36.2%
  • New Zealand Commodity prices m/m -3.1% vs. -4.9% previously
  • Australia trade balance -2.75bn vs. -2.21bn
  • UK Nationwide HPI m/m -0.2% vs. 0.6%
  • UK Construction PMI 58.1 vs. 56.6
  • Eurozone PPI m/m 0.0% vs. 0.1%
  • US Nonfarm payroll change 223k vs. 231k; unemployment rate 5.3% vs. 5.4%
  • US Average hourly earnings m/m 0.0% vs. 0.2%; y/y 2% vs. 2.3%
  • Weekly jobless claims 281k vs. 270k

Later:

  • US Factory orders
  • ECB President Draghi speech

The Asian markets opened on a cautious note a day after Greece headlines continued to hit the newswires. The Asian session was relatively calm although the Kiwi continued to post losses early into today’s trading session. NZDUSD came under renewed selling few days ago as the Global Dairy Trade index plummeted by -10%. The Kiwi posted a new low at 0.6662 before easing back from these levels.

The Aussie dollar was also under pressure as the currency started its descent since yesterday’s high above 0.77235. Today’s opening session saw a modest recovery but prices failed to hold on to the gains. AUDUSD posted session lows below 0.75995 before stabilizing.

The Japanese Yen which continued to rally on account of the Greece uncertainty saw the risk off mode take over as the currency weakened, taking USDJPY almost close to filling Monday’s gap. USDJPY hit a session high above 123.69 and plummeted in the US trading session.

In Europe, the Euro was largely stable today and trading mostly flat in the run up to the US trading session. EURUSD posted session lows to 1.103 before stabilizing to trade above 1.109 after the US NFP release. Greece headlines were quieter today with the Eurogroup acknowledging late yesterday evening that there would be no further discussions until the referendum results were out. The ECB also refused to raise the ELA assistance making it even more difficult for Greek banks to stay afloat in the run up to the referendum this Sunday.

UK’s construction PMI data showed a modest recovery of 58.1 beating estimates of 56.6. The Cable was however under pressure early on as the GBPUSD fell to session lows of 1.5564 before staging a recovery.

The US trading session saw the release of the June payrolls report, which was mixed bag. While unemployment rate beat estimates improving to 5.3%, the June employment change fell below forecasts, of 231k, printing 223k jobs for the month of June. The average earnings index remained flat for the month, taking down the annual pace of earnings to 2%, from 2.3% previously.

The weekly unemployment claims was also released simultaneously which showed 281k jobless claims, slightly above consensus forecasts of 270k. The mixed bag of a jobs report yet again puts to question the Fed’s rate hike timetable.

The US markets remain close tomorrow on account of the July the 4th celebrations and markets and especially the Euro, single currency is most likely to move into a holding pattern ahead of the Greece vote on Sunday.

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John has over 8 years of experience specializing in the currency markets, tracking the macroeconomic and geopolitical developments shaping the financial markets. John applies a mix of fundamental and technical analysis and has a special interest in inter-market analysis and global politics.

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