Financial markets are reacting to better than expected Non-Farm Payroll numbers with equities poised for new record high and a weaker dollar. US Treasury yields fell after the jobs report helping to weaken the dollar. Also, speculative positions are clouding the price action across markets as many traders unwind positions before the long weekend. Canadian dollar strengthens as the price of oil remains high. Expect volatility to remain high through much of FX trading today.
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July 2, 2021
EUR/USD 1.1831 GBP/USD 1.3761 USD/CAD 1.2388 AUD/USD 0.7482 USD/JPY 111.34 USD/CNH 6.4815 USD/ILS 3.2673 USD/MXN 19.8977 USD/CHF 0.9254 USD/INR 74.7450 USD/BRL 5.0215 USD/SGD 1.3492 USD/DKK 6.2850 USD/SEK 8.5915 USD/NOK 8.6478
The dollar spot indices are showing a weaker dollar after the jobs data for June.
Non-Farm Payrolls came in at +850K which was significantly better than the +720K expected. Prior month was also revised up to 583K. Surprisingly, the headline unemployment rate increased to 5.9% from 5.8%. Hedge fund and other leveraged speculators had made bets the dollar would rally regardless of the actual job numbers. Those wagers seem to be unwinding this morning.GBP
The pound is flat despite losing ground to the greenback in the past six trading days. Delta variant Covid case increases in the UK have put the reopening of the UK economy in doubt.EUR
After initially gaining on the dollar, the euro is flat as we write. Bullish dollar positions are being unwound after the US jobs report.
Overnight, Christine Lagarde said she believes inflation will steady below their target in the medium term, after climbing to 2% this year, it will fall to 1.5% in 2022 and 1.4% in 2023. The euro has retraced slightly down 0.27% since yesterday’s high.CAD
The Canadian dollar is stronger today on overall dollar weakness. Trading is volatile as the price of oil fluctuates.
WTI Crude oil trades near the highest level since 2018, around $75. OPEC+ supply increase of 400,000 bpd now in doubt with focus turning to next month’s OPEC meeting.ASIA/PACIFIC
The Japanese yen is stronger but holding above the 111 level. Lower US Treasury yields likely to reduce dollar-buying/yen-selling from Japanese investors.
The Chinese renminbi strengthened on overall dollar weakness. The communist party in China is celebrating its 100th anniversary and monetary authorities are keen to keep the yuan steady going into the weekend.
For more analysis on FX markets or information regarding SVB's FX services:
See all of SVB's latest FX information and commentary at www.svb.com/trends-insights/foreign-exchange-advisory
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