After three straight sessions of losses, the United States Dollar is regaining some ground this morning following the release of US employment data.
Overview
The Buck, though still set to close the week weaker overall, is up across the board today as risk sentiment rallies. While markets are still quite wary of fiscal and monetary risks on the side of the US economy, volatility and flow dynamics have somewhat normalized through this week, and FX movements this morning are a bit more stable.
Today’s employment report showed that the US added 139,000 jobs last month, above expectations of an increase of 126,000. April’s figure was revised down, by contrast, but the worst of economists’ fears following a dismal reading from AFP earlier this week were not realized. There is still a substantial amount of concern in the air regarding the downside risks the US currently faces to employment from trade tensions around the world, but such worries have yet to materialize in the hard data markets have gotten since April 2nd’s Liberation Day announcements. The unemployment rate held steady at 4.2%, as well, while wage growth on an annualized basis did accelerate. All told, the US labor market is definitely moderating, but there is little in the way of flashing red warning signs so far that would prompt a pivot toward dovishness from the Federal Reserve. It’s also been underlined once again that ADP employment figures, released two days before non-farm payrolls, often do not correlate very much, if at all, with the larger employment data that comes at the beginning of every month.
What to Watch This Week…
- Monex USA Online is always open
The complete Economic Calendar can be found here.
EUR ⇓
The single currency is losing ground against the Greenback to the tune of half a percent this morning, following US employment data that was surprisingly benign. EUR did gain substantial ground during yesterday’s trading session versus USD, after the European Central Bank cut its key interest rate by 25 basis points but signaled that it is considering a slowdown of this easing cycle. ECB head Christine Lagarde mentioned that the central bank’s current interest rate level could be close to a neutral rate, meaning that monetary policy is neither helping nor hindering the speed of the economy.
JPY ⇓
Japanese Yen is the biggest loser in the G10 this morning, posting a decline of roughly 0.9% against the Dollar and losing ground against all other major currencies as well. The US Treasury last night, in a surprisingly overt statement, called for the Bank of Japan to raise its interest rate in order to strengthen the Yen, but such an announcement appears to have backfired on the USDJPY pair in particular. Additionally, the Bank of Japan is reportedly considering changing the pace of its bond purchases, injecting uncertainty into Yen-based trading.
