The United States Dollar has managed to hold on to its gains from yesterday’s session and is continuing to trade stronger this morning, but is still set to close the holiday-shortened week below Monday morning’s opening mark.
Overview
Trading focus yesterday was largely on the tax and spending bill making its way through Congress, as markets warily watch the potential for a substantial increase to the US government deficit.
Tides changed this morning, however, following a surprisingly positive US jobs report. Today’s non-farm payrolls showed the US added 147,000 jobs last month, above market expectations of a gain of 106,000. Unemployment also decreased from 4.3% to 4.1%, beating expectations of no change by a substantial margin. The devil remains in the details though, and the sector breakdown of this positive reading shows that the vast majority of new jobs were added in state and local governments, corresponding with a weak ADP private payroll release yesterday morning. The labor force participation rate slipped slightly, and private and manufacturing payrolls undershot expectations. As such, the Buck’s initial gain off such a strong headline figure has already mostly dissipated, in keeping with the year’s theme of “all news is bad news.”
Fed Chair Jerome Powell also made headlines yesterday speaking at the European Central Bank’s forum in Sintra, saying that if not for uncertainty on the inflationary impact of trade and tariff policies the Fed likely would have already cut interest rates this year. The Fed’s next meeting is at the end of this month, and while no rate changes are expected just then, bets for easing in the second half of this year have grown throughout this week. As markets prep for the holiday closure tomorrow, it’s likely that the US session today will see substantial volatility through thin liquidity conditions.
What to Watch This Week…
- Monex USA will be closed Friday July 4
- Monex USA Online is always open
