News & Analysis at your fingertips.

We use a range of cookies to give you the best possible browsing experience. By continuing to use this website, you agree to our use of cookies.
You can learn more about our cookie policy here, or by following the link at the bottom of any page on our site. See our updated Privacy Policy here.

0

Notifications

Notifications below are based on filters which can be adjusted via Economic and Webinar Calendar pages.

Live Webinar

Live Webinar Events

0

Economic Calendar

Economic Calendar Events

0
Free Trading Guides
Subscribe
Please try again
More View more
Real Time News
  • I read this morning that Boston Fed President Eric Rosengren is retiring 9 months earlier than his term expiration due to health issues. Hope he recovers quickly. Could change the calculus for the Fed's policy position next year as he was an incoming hawkish voter. #Tapering https://t.co/WDUeZl3Ziy
  • PRESIDENT BIDEN WILL GET COVID19 BOOSTER SHOT THIS AFTERNOON $PFE $MRNA
  • The next 24 hours is going to be interesting for monetary and fiscal policy insight - particularly in the US. Keeping tabs on the Dollar and $SPX https://t.co/K50JIHYPVd
  • BoE Governor Bailey says the rate of recovery has slowed over recent months and that slowing is continuing - Most MPC members view that outlook for the labour market as highly uncertain and to some degree likely to be resolved in fairly short order $GBP
  • The week starts off with elevated expectations for seasonal volatility, central bank speculation and critical political uncertainties. DailyFX's @JohnKicklighter highlights the dominating themes in the markets this week👇 https://t.co/h6xR9DUGge
  • Heads Up:🇬🇧 BoE Gov Bailey Speech due at 15:00 GMT (15min) https://www.dailyfx.com/economic-calendar#2021-09-27
  • Tech stocks not having a good day, but cyclicals are on fire. Energy and financials sharply higher, materials also in positive territory. $ARKK about to break a double top pattern support #trading $XLE $XOP $XLF $XLB
  • Treasury bond yields extending their push higher across the curve. Ten-year just pierced 1.50%, five-year trading at its steepest level since Feb 2020. This brings the Nasdaq 100 to Russell 2000 ratio into focus with growth underperforming value amid rising rates. $NDX $RUT $TNX https://t.co/hZvP7wQE4E
  • $USDMXN gains ground at the start of the week, bolstered by higher US Treasury rates. For reference, the US10 yield briefly climbed to 1.51% this morning, its highest level since late June #trading #TRMX
  • The US Dollar Index (DXY) is trending higher and on the verge of testing an important set of resistance levels as we head towards the final frame of the year. Get your $USD market update from @PaulRobinsonFX here:https://t.co/SSMaqmiBAr https://t.co/iz3koCpPlD
US Dollar Stabilizes after All-Around Solid July Nonfarm Payrolls Report

US Dollar Stabilizes after All-Around Solid July Nonfarm Payrolls Report

Christopher Vecchio, CFA, Senior Strategist

Talking Points:

- Headline jobs growth comes above +200K for the fifth time in 2017.

- US wage growth holds at+2.5% y/y as the unemployment rate drops back to 4.3%.

- The retail trading crowd continue to reduce net-long US Dollar positioning, which be a sign of the greenback stabilizing.

See our longer-term forecasts for the US Dollar, Euro, British Pound and more with the DailyFX Trading Guides

The US labor market continued to exhibit strength in July, with the headline Nonfarm Payrolls figure coming in at +209K, easily beating expectations of +180K. The June reading was revised slightly higher to +231K from +222K; overall, the net-two month revision was +2K.

Today’s reading of +209K is on the high end of estimates,given other data points ahead of the release. The July US ISM Services/Non-Manufacturing index decreased to 53.9 (from 57.4 previously) while the July ADP Employment Change showed jobs growth of +178K. Using a 10-year rolling model, the ADP report and the ISM Services report account for 91% of the changes in the NFP figure (R^2 = 0.91), and, in sum, these proximal trackers of the US labor market were suggesting a pace of jobs growth north of +180K.

In addition to the headline beat relative to expectations, other parts of the report painted a stable picture of labor force strength. The labor force participation rate edged higher, up to 62.9% from 62.8%, which makes the drop in the unemployment rate (4.3% from 4.3%) all the more impressive. Wage growth held at +2.5% y/y, bucking expectations of a dip to +2.4%.

It’s important to keep in mind that the US economy doesn’t need such strength in the headline figure to maintain the unemployment rate at its current “full employment” level. According to the Atlanta Fed jobs calculator, the US economy needs to add +115K jobs per month in order to see the unemployment rate at 4.3% through the end of the year.

As far as rate hikes are concerned, this report is a mixed bag. Fed funds rate expectations continue to price in March 2018 as the most likely period for the next rate move, although hike odds were moving higher after the data. Overall, the July US Nonfarm Payrolls report was all-around a solid report that could very well prove to be a stabilizing force for the US Dollar in the near-term.

Here are the data driving the US Dollar this morning:

- USD Unemployment Rate (JUL): 4.3% as expected, from 4.4%.

- USD Change in Nonfarm Payrolls (JUL): +209K versus +180K expected, from +231K (revised higher from +222K).

- USD Labor Force Participation Rate (JUL): 62.9% from 62.8%.

- USD Average Hourly Earnings (JUL): +2.5% versus +2.4% expected, from +2.5% (y/y).

See the DailyFX economic calendar for Friday, August 4, 2017

Chart 1: DXY Index 1-minute Chart (August 4, 2017 Intraday)

US Dollar Stabilizes after All-Around Solid July Nonfarm Payrolls Report

Immediately following the data, the US Dollar traded higher versus the Euro and the Japanese Yen, with the Dollar Index (DXY) gaining from 92.81 ahead of the data to as high as 93.18 at the time this report was written. EUR/USD traded between 1.1825 and 1.1867 around the data, while USD/JPY traded between 110.06 and 110.77.

Upcoming Webinars for Week of August 6 to August 11, 2017

Monday at 7:30 EDT/11:30 GMT: FX Week Ahead

Wednesday at 6:00 EDT/10:00 GMT: Trading Q&A

Thursday at 7:30 EDT/11:30 GMT: Central Bank Weekly

See the full DailyFX Webinar Calendar for other upcoming strategy sessions

Read more: Preview for July NFPs and Strategy Outlook for USD-pairs

--- Written by Christopher Vecchio, Senior Currency Strategist

To contact Christopher Vecchio, e-mail cvecchio@dailyfx.com

Follow him on Twitter at @CVecchioFX

To be added to Christopher's e-mail distribution list, please fill out this form

DailyFX provides forex news and technical analysis on the trends that influence the global currency markets.

DISCLOSURES