The United States Dollar has decidedly snapped its six-session winning streak this morning and is taking a major hit against all major and minor currencies
Overview
following the release of a dismal jobs report for the month of July. The Dollar’s gains following Fed Chair Jerome Powell’s hawkish press conference Wednesday afternoon have been completely wiped out, treasuries are gaining substantial ground, and equities are set to open much lower. Further tariff news overnight has already fallen into the background and the health of the US labor market is the primary focus of traders this morning.
This morning’s non-farm payrolls report showed the US added just 73,000 jobs last month, well below expectations for an addition of 104,000. The more shocking figure, however, came from the revisions to June’s report, which came down from 147,000 to just a paltry 14,000. The three-month average employment change now shows that the US has lost jobs from May through July, and unemployment ticked higher to 4.2%. Naturally, President Trump has immediately taken to social media to call on the Fed to lower interest rates, and it’s quite possible his crusade against Chair Powell will reach a fever pitch over the next few days. Markets believed as recently as yesterday the odds of a 25 basis point cut in September sat at 40%, and that figure is all the way up to 80% at the time of writing. 50 basis points of easing this calendar year is now fully priced in, and the Dollar is reacting in kind.
Not to be forgotten, President Trump yesterday evening released a slew of new tariff rates on nations that had not signed trade deals with the US ahead of last night’s deadline. These new rates are set to go into effect August 7th, and are headlined by a 35% levy on Canadian goods that are not covered under the USMCA free trade agreement he negotiated during his first term.
What to Watch This Week…
- University of Michigan Consumer Sentiment, Friday 10AM
- Monex USA Online is always open
The complete Economic Calendar can be found here.
EUR ⇑
The single currency has gained well over a percent of ground back versus the buck in the wake of the US’ non-farm payrolls report, erasing all its losses from Wednesday morning to now. This morning’s employment data in effect has negated Jay Powell’s hawkish tone from Wednesday afternoon and the move on EURUSD is decidedly based in Dollar supply rather than demand for EUR on any data out of the economic bloc. Because the Eurozone’s own economic situation is rather murky, bad news from the US is giving EUR an outsized boost compared with most other majors.
JPY ⇑
Japanese Yen is the top performer in the G10 this morning, driven primarily by the US labor report with a secondary focus on last night’s tariff news. The Yen, after hitting a 4-month low against USD yesterday, has rocketed up 1.6% in trading this morning as traders seek out haven assets on the heels of US non-farm payrolls. Following last night’s tariff flurry, too, traders have been repricing odds of a rate hike from the Bank of Japan and many now believe the BoJ could raise its key interest rate as soon as October.
