Resurgent US jobs strengthen dollar while markets await this week’s comments from Fed chair Powell to congress
Peter Compton " | July 8, 2019
The US dollar has regained most of the losses since the Fed last signaled a willingness to cut rates following the FOMC meeting in mid-June. The strong jobs data on Friday erased market expectations of three rate cuts in 2019. Stronger global economic prospects are helping commodity currencies especially the Canadian dollar. The Turkish lira plunges after Erdogan fires head of central bank.
Wednesday: Minutes from Federal Reserve’s June meeting
Thursday: Consumer Price Index for June
Friday: Producer Price Index for June
July 8, 2019
EUR/USD 1.1217 GBP/USD 1.2511 USD/CAD 1.3066 AUD/USD 0.6984 USD/JPY 108.62 USD/CNH 6.8867 USD/ILS 3.5697 USD/MXN 18.9298 USD/CHF 0.9935 USD/INR 68.6575
Friday’s firm nonfarm payrolls report weighed on market expectations regarding the pace of Federal Reserve interest rate cuts. The above forecast reading of 224,000 jobs added to the workforce was an upward surprise to markets, with some participants anticipating the positive data to allow the Fed some breathing space. Chairman Powell will present his view of the economy to Congress on Wednesday and Thursday. The central bank remains under pressure from President Trump to pursue a lower interest rate environment.GBP
The pound is slightly stronger vs. the US dollar in volatile trading as FX traders weigh the prospect of a “no-deal” Brexit. Boris Johnson reiterates his willingness to a hard Brexit and looks set to secure a convincing victory over his competitor Jeremy Hunt in the contest to become the next leader of the Conservative Party. A YouGov poll indicated 74% of party members would back Boris Johnson.EUR
The euro is up modestly vs. the US dollar as EU finance ministers meet this week. In Greece, Kyriakos Mitsotakis is set to become prime minster after the center-right New Democracy party secured election victory with 39.7% of the vote. ECB member Francois Villeroy de Galhau confirmed the role of the central bank was to maintain price stability and not to set foreign exchange levels.CAD
The Canadian dollar continues to strengthen vs. the US dollar as the Canadian economy shows robust growth and the price of oil gains. CAD is up 3.4% since June 1.ASIA/PACIFIC
Australian and New Zealand dollars are both stronger today as commodity prices rise despite Friday’s US dollar rally. Japan and South Korea’s currencies are both weaker as decades old tensions lead to some technology trade threats.