After a three-month rally for the U.S. dollar, the month of July started on the back foot last week as the likes of the euro, pound and Aussie all found some much-needed support. But the yen was lagging behind last week, undermined in part by the fact the Bank of Japan remains one of the most dovish central banks out there.
The U.S. dollar fell against major pairs on Friday despite a strong June jobs report due to the impending start of tariffs against Chinese goods and the retaliation from the Asian nation on U.S. exports. The U.S. economy added 213,000 jobs and wages rose 0.2% but it is the threat of trade war escalation that put pressure on the U.S. currency.
After President Trump spoiled “traders’ Christmas” last month with a now-infamous tweet implying that the May jobs report would be strong, market participants were happy to get back to their “normal” tradition of overanalyzing and excessively dissecting the volatile monthly jobs report at the moment of its release today.
Mirroring the going stock market indecisiveness, the risk-sensitive euro/Japanese yen currency pair is currently stuck below a key technical area around 129.50. We are waiting to see if it will start to break down with some follow through now, or whether the buyers will come back and regain control. Furthermore, gold’s sizeable rally on Tuesday may also be indicative of investors growing increasingly risk-averse.
U.S. investors, out celebrating July 4 holidays, didn’t miss much at all yesterday in the markets. They are back today and with them, volatility is set to return. In fact, European stock markets have started sharply higher this morning although the forex markets have been fairly quiet so far as investors await key U.S. data releases later on in the afternoon, which should provide us vital clues about Friday’s key employment report. Depending on the outcome of today’s data, the dollar could start to move more meaningfully ahead of the jobs report on Friday.
The U.S. dollar is higher against most major currencies on Friday. The Canadian dollar was the single currency that appreciated versus the greenback. The loonie moved higher at the end of the week with the release of a stronger than expected monthly GDP number. The softer trade comments also helped dissipate the risk aversion sentiment lifting the Canadian currency.
For euro/British pound (EUR/GBP) currency pair traders, there’s been good news and bad news over the last couple of months: The good news is that they’ve had plenty of time to watch the World Cup…and the bad news is that neither bulls nor bears are making any money in the pair!
The U.S. dollar is mixed against major pairs. Safe havens like the Swiss franc, Japanese yen and the euro have gained against the greenback, while the Canadian and New Zealand dollars along with the pound are lower. Strong data in Europe boosted the single currency but the rally was short-lived after the Trump administration announced a review of US-EU trade that could result in a 20% tariff on European car imports.