THE TAKEAWAY: USD Change in Nonfarm Payrolls (JUN) > +195K versus +165K expected, from +195K (revised higher from +175K) > USD Unemployment Rate (U3) (MAY) > 7.6% versus 7.5% expected, from 7.6% > USDOLLAR BULLISH
Back-to-back upside surprises on the headline US Nonfarm Payrolls report has the US Dollar streaking to fresh July highs, as it now has reached its highest level since July 2010 (as measured by the Dow Jones FXCM Dollar Index (Ticker: USDOLLAR)).
Overall, the data fits neatly in the “QE3 taper” framework set forth by the Federal Reserve at its June 19 policy meeting; translating roughly into a stronger US Dollar, weaker US equities, weaker US Treasuries, and a weaker commodity complex. The important data fueling the US Dollar surge:
- Change in Nonfarm Payrolls: +195K versus +165K expected, from +195K (revised higher from +175K)
- Change in Private Payrolls: +202K versus +175K expected, from +207K (revised higher from +178K)
- Unemployment Rate (U3): 7.6% versus 7.5% expected, from 7.6%
- Underemployment Rate (U6): 14.3% from 13.8%
- Participation Rate: 63.5% from 63.4%
USDJPY 1-minute Chart: July 5, 2013
Charts Created using Marketscope – prepared by Christopher Vecchio
Following the announcement, the USDJPY rallied from ¥100.11 to as high as 101.13, and has now set fresh July highs after reaching its highest level since May 31. The US Dollar exhibited strength across the board following the announcement, with the EURUSD easing to $1.2807 from 1.2890, the GBPUSD dropping to $1.4856 from 1.4965, and the AUDUSD dropping from $0.9178 to as low as 0.9097, at the time this report was written.
--- Written by Christopher Vecchio, Currency Analyst
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