US Dollar Dips After Mixed Data on Labor Market

Market Reviews

The euro rose against the US dollar, with the EUR/USD pair breaking above 1.17, as the dollar weakened amid news that US duties on Chinese goods began to operate, and China is ready to take retaliatory measures. Mixed jobs data also exerted pressure on the dollar. Meanwhile, the craving for risk has grown, increasing demand for high-yielding currencies, oil and stocks. In addition, strong data on industrial production in Germany for May provided support for the euro.

US non-farm payroll (NFP) report showed 213k growth in June, above expectation of 190k. Prior month’s figure was revised up from 223k to 244k. Unemployment rate rose to 4.0%, up from 3.8%. Wage growth was a miss though as average hourly earnings rose 0.2% mom versus expectation of 0.3% mom. Also from the US, trade deficit narrowed slightly to USD -43.1B in May.

German industrial output jumped 2.6% in May, the highest rise since November. The reading exceeded economists’ forecast for a rise of 0.3%. The figure for April was revised to a fall of 1.3% from a previously reported fall of 1.0%. Compared with May last year, production surged 3.1%. Earlier, it was reported, that industrial orders had surged by 2.6% in May after four consecutive monthly drops.

Today’s data also showed, that Canada’s employment market rose 31.8k in June, above expectation of 24.0k. Unemployment rate rose to 6.0%, from 5.8%. Trade deficit widened to CAD -2.8B in May.

Released earlier today, Swiss foreign currency reserves rose to CHF 749B in June. Japan leading index rose to 106.9 in May. Japan household spending dropped -3.9% yoy in May, labor cash earnings rose 2.1% yoy.

Japan Cabinet Office in its new economic projections forecasts the economy to grow by 1.5% in real term for current fiscal 2018 and the fiscal-2019. For the current fiscal 2018, overall CPI is projected to be at 1.1%, unchanged from prior estimate. Overall price CPI is forecast to rise 1.5% in fiscal 2019. With adjustment on the sales tax hike, overall CPI is projected to slow to 1.0%.