Two Spots Where USD Couldn’t Rally
Let's start with the news. Non-farm payrolls rose a sparkling 288K compared to 212K expected. The unemployment rate fell two ticks to 6.1% with no change in the participation rate. Combing through the finer details of the report, it's a challenge to find a significant concern.
The strong report underlines the better tone in US data that we have emphasized and the US dollar caught a broad bid. USD/JPY jumped to 102.20 from 101.90 and EUR/USD fell a half cent to 1.3600. From there the ECB meeting sent out some ripples (but no waves) and the market moved sideways with US traders sneaking out early for the long weekend.
Similar sized moves hit USD/CAD and cable but there it was a different story. From 1.7103 cable stormed back to 1.7155. USD/CAD rose to 1.0680 but sharply turned around and fell to a six-month low of 1.0621.
It's painful to buy the pound or loonie after the long runs they've been on. Indicators are overbought and the feeling of having missed out is prevalent. But if those pairs were going to retrace, Thursday's data would have been a prime opportunity.
The next focus shifts to the holiday trade. Asian and European markets are open as usual but many trading desks will take advantage of the US holiday on a summer Friday to take a break. The calendar is light through European trading with only May German factory orders at 0600 GMT on the schedule.Watch out for whippy, flow-driven moves. If they're not connected to news, they rarely last.
|Change in Manufacturing Payrolls (JUN)|
|16K||10K||10K||Jul 03 12:30|
|Change in Nonfarm Payrolls (JUN)|
|288K||215K||224K||Jul 03 12:30|
|Change in Private Payrolls (JUN)|
|262K||213K||224K||Jul 03 12:30|
|Unemployment Rate (JUN)|
|6.1%||6.3%||6.3%||Jul 03 12:30|
|Germany Factory Orders s.a. (MAY) (m/m)|
|3.1%||Jul 04 6:00|
|Germany Factory Orders n.s.a. (MAY) (y/y)|
|6.3%||Jul 04 6:00|
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