Jobs Report – US dollar Buy Rumour Sell Fact

The currency markets spent last week buying back the US Dollar against all of its Rivals. This was in anticipation of Friday’s US Non-Farm Payrolls report, where analysts were expecting a better number in June from May.

A total of 850,000 jobs were created, which was a bigger increase than the expected 700,000. The Unemployment Rate though moved higher, to 5.9% from May’s 5.8%, and expectations of 5.7%. Wages (Average Hourly Earnings) slipped 0.3% from 0.4%, missing forecasts of 0.4%. So while the Jobs creation month-on-month improved, it was a mixed result.

US bond yields eased, the Dollar gave back most of its gains and equities rallied. It was a classic “buy the rumour, sell the fact” scenario for the Greenback. Traders took whatever profits they had.
The US Federal Reserve’s June meeting minutes are this week’s big event (Thursday, July 8 in Sydney 4 am). Following the release of the minutes, markets will be looking at the potential timeline for any tapering from the US central bank.

Popular Rate Trends Last Week

AUD/USD – The Australian Dollar slumped from 0.7595 level where it started the week to a low at 0.7460 right after the release of the US Payrolls report. Traders spent the rest of the session buying back the Aussie to 0.7525 where it settled at the close of trading in New York.

EUR/USD – A similar pattern engulfed trading in the Euro. The shared currency started last week at 1.1935, was sold down to an overnight and early April low at 1.1837 right after the NFP report. The Euro rose from its lows to finish marginally higher at 1.1867. EUR/USD will continue to lag behind its other major peers.

GBP/USD – Sterling spent last week grinding lower from 1.3905 where it began. The British Pound slumped to an overnight and April low at 1.3731 right after the release of the US Jobs report. Traders spent the rest of the session driving Sterling higher as profit taking set in. GBP/USD closed at 1.3830 on Friday.

USD/JPY – Against the Japanese Yen, the Greenback began last week at 110.77 on the broadly based stronger US Dollar. USD/JPY hit an overnight and late March 2020 high at 111.66 before retreating to its 111.02 close on Friday. The US 10-year bond yield, which is a main driver of the USD/JPY pair, fell to 1.42% on Friday, down from 1.52% at the start of the week.

USD/CAD – The Dollar rallied against the Canadian Loonie to a high at 1.2450 following the release of the US NFP on Friday. USD/CAD slumped back to 1.2325 at the close of trading on Friday. Canada’s Dollar is often referred to as the Loonie because of the appearance of a loon on the back of a CAD1$ coin. The loon is a North American aquatic bird. Similar to the Kiwi and the New Zealand Dollar.

NZD/USD – The Kiwi (New Zealand’s flightless bird) found wings at the start of the week, opening at 0.7065. On Friday, NZD/USD slid to an overnight low at 0.6947 before the Flightless Bird found its wings again, soaring to 0.7032 New York close.

USD/SGD – began the week on firm footing at 1.3425. The US Dollar took off on Friday to an overnight and late March 2020 high at 1.3473. This followed the release of the US Payrolls report. USD/SGD then eased modestly and settled to a 1.3465 finish. USD/SGD looks bid on the surface but should struggle as it nears the 1.35 hurdle.

USD/THB – Like most of the US Dollar against Asian and Emerging Market currencies, the Dollar-Thai Baht pair was well supported all week. On Monday, USD/THB opened at 31.95, trading to a high of 32.28 on Friday post-US Non-Farms Payrolls release. The low trade for the week was at 31.65.
USD/THB closed in New York at 32.17, where it should open on Monday. Looking poised higher, at least until the FOMC meeting minutes release on Thursday.

AUD/JPY – kicked off the week at 84.15, not far from it’s high at 84.26. From there the AUD/USD began a slide which took this cross along with it. AUD/JPY saw a weekly low at 82.81 on Thursday, just prior to the release of the US Jobs report. Immediately following the release of Friday’s US Payrolls, the AUD/JPY hit a high of 83.64 before easing to settle at 83.55. A supported AUD/USD will drive this cross-currency pair up.

EUR/JPY – The Euro was generally lacklustre in its performance against the Greenback and related crosses. The EUR/JPY was no exception. The market still sees the ECB as the least hawkish of the major central banks. A week ago, EUR/JPY was changing hands at 132.25. On Friday, the EUR/JPY cross hit its weekly high at 132.43, post US Payrolls before easing to settle at 131.70. Low for the week was 131.28 (Thursday). Looking a bit soggy heading into the new week.

EUR/GBP – the shared currency was also soft against the British Pound, opening the week at 0.8600. From there EUR/GBP slid to 0.8564 on Friday, the weekly low. The high for the EUR/GBP cross pair was 0.8616 (Thursday). Closing rate for EUR/GBP was 0.8575. Hard to see it outside of 0.8500-0.8650 this week.

AUD/NZD – Pretty tight and featureless describes how this cross traded in the past week. AUD/NZD peaked at 1.0765 (Wednesday). It has since drifted lower to its 1.0700 close on Friday, with the weekly low trade at 1.07012, which came right after the US Jobs report. Looks neutral this week, with a likely 1.0650-1.0750 range likely.

EUR/AUD – on Monday, the EUR/AUD was trading at 1.5715, where it climbed to a weekly high at 1.5879 on Friday. The EUR/AUD cross then drifted back down to finish at 1.5762. Hard to see this cross outside of 1.5700-1.5950 just yet.

USD/INR – The Greenback held steady all week against the Indian Rupee just like it did against most of the Asian and Emerging Market currencies. On Monday, USD/INR was trading at 74.30. The Greenback hit a high of 75.17 Indian Rupees on Friday immediately after the release of the US Payrolls report. USD/INR then eased modestly to settle at 74.70 in New York on Friday. A grind higher to 75.50 is possible.

USD/PHP – the US Dollar began the week at 48.60 Philippine Pesos, which was its low. USD/PHP spent the week grinding higher to its weekly peak at 49.58 on Friday morning, prior to the release of the US Jobs report. USD/PHP then drifted lower to its 49.30 finish on Friday. Like the rest of the USD/Asians, USD/PHP looks likely to test higher heading into the all-important release of the US Federal Reserve’s FOMC meeting minutes release.