Forex headlines for July 3, 2014:
Data:
- Non farm payrolls 288k vs 212k exp
- Unemployment rate 6.1% vs 6.3% exp
- Participation rate 62.8% vs 62.8% prior
- June ISM non-manufacturing index 56.0 vs 56.3 prior
- ISM’s Nieves says non-manufacturing data remains ‘strong’
- Initial jobless claims 312K vs 313K expected
- US May trade deficit $44.4B vs $45.0B expected
- Canadian May trade balance -$0.15B vs -$0.3B expected
ECB
- ECB leaves rates unchanged
- Draghi sees ECB rates at current level for extended period
- Economic risks remain ‘on the downside’
- Sees upside and downside risks to inflation but they’re limited and broadly balanced over medium term
- ECB switches to six-weeks between meetings
- ECB to publish meeting minutes
- Draghi says overall max takeup of TLTRO could be 1 trillion euros
- TLTRO’s will have ‘pay-back’ clause if banks to show increase in lending
- Draghi says EUR/USD rate is “very important” for price stability
Other
- French deficits to miss government targets – IMF
- NAHB says Hurricane Arthur to reach Category 2 status near North Carolina
- Goldman Sachs cuts Q2 US GDP forecast on trade deficit
- ECB’s Weidmann says low inflation for too long could harm economy
- ECB’s Coeure: Long-term loans are crucial complement to rate cuts
- S&P 500 up 10.8 points to record 1985 in holiday-shortened session
- Gold down $7 to $1319
- WTI crude down 45-cents to $104.03
- CAD leads, AUD lags
It was a huge day for news but the strong non-farm payrolls report stole the show. For once ADP was right and for once the US dollar rallied.
USD/JPY jumped 30 pips to 102.20 on the report and struggled for a time to push further. It eventually did but couldn’t get past 102.27 or resistance at the late-June high of 102.37. The market went straight sideways after the US checked out. Last at 102.18.
EUR/USD fell to 1.3610 from 1.3650 on the job report. When Draghi took the stage there was some small additional pressure and some pulses rose on a break of 1.3600 but there was no appetite to sell into the low at 1.3596. There was appetite to shut it down after that and the pair chopped to 1.3607 last.
Cable and CAD were the two interesting movers. Both were beaten up on the jobs report but both recovered. Cable fell to 1.7103 but then turned around and climbed to 1.7150. USD/CAD rose to 1.06780 but repeatedly hit offers there and later touched a six-month low of 1.0621. Impressive turnarounds in both.
The Aussie, however, was unable to get off the floor. Stevens talked down the chance of rate hikes overnight and the bidders sold a bounce to 0.9360 and we’ve skidded back to 0.9346, not far from the session low of 0.9329.
