Intraday Market Thoughts

Another Jobs Number Fails to Boost USD

by Adam Button
Jul 9, 2014 0:08

The US dollar demonstrated once again on Tuesday that it can't find traction on good news. The buck sank like Brazil's World Cup hopes (ok not that bad) despite strong JOLTS numbers while NZD was the top performer. Chinese CPI is out later.  In our Premium Insights, 1 of  2 AUDUSD is in progress so are both EURAUD shorts, 1 of which is 95 pips in the money ahead of Thursday's Aussie jobs data.

The employment picture is clearly improving in the United States. The JOLTS report surged in May for the third month as job openings rose to 4635K compared to 4350K and nearly matched the pre-crisis high. It's a laggy report but it's one that the Fed follows closely and confirms that the trend in other employment indicators is real.

The tightening labor market may also be spilling over to wage hikes as the NFIB survey showed 21% of small business hiking wages in the past three months. The small business sector is often at the front end of a wage lifting cycle.

Still, there are concerns that jobs growth is happening in quality industries and that job advertisements are promising higher pay. The market certainly isn't giving the US dollar any credit. USD/JPY has wiped out all the ADP/NFP gains and other pairs continue to eat away.

Two of the most notable are GBP and NZD. The pound easily shrugged off a very weak manufacturing report and a 50 pip decline. Cable closed near unchanged on the day at 1.7129. The New Zealand dollar rose to a fresh cycle high after Fitch upgraded its outlook to positive. The pair is closing in on the 2011 high of 0.8842.

The focus stays on the Asia-Pacific region in the hours ahead with June Chinese PPI and CPI due at 0130 GMT. The CPI report is key and is expected to moderate to 2.4% y/y from 2.5%. The Chinese government has enough leeway to add stimulus or wait so the market won't be too volatile on a 1 or 2 tick miss.

Act Exp Prev GMT
JOLTs Job Openings
4.64M 4.53M 4.46M Jul 08 14:00
Consumer Prce Index (JUN) (m/m)
0.1% Jul 09 1:30
Consumer Prce Index (JUN) (y/y)
2.4% 2.5% Jul 09 1:30

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