Dollar Rising Again on Strong NFP Data

Market overviews

Dollar rises in early US session after stronger than expected non-farm payroll data. It’s also supported by extended rebound in 10-year yield, which reclaims 3%. Euro also follows German yield higher. On the other hand, Canadian Dollar turns softer after poor employment data. Yen is mixed after the tragic death of former Prime Minister Shinzo Abe.

In Europe, at the time of writing, FTSE is down -0.35%. DAX is up 0.65%. CAC is down -0.09%. Germany 10-year yield is up 0.033 at 1.298. Earlier in Asia, Nikkei rose 0.10%. Hong Kong HSI rose 0.38%. China Shanghai SSE dropped -0.25%. Singapore Strait Times rose 0.06%. Japan 10-year JGB yield dropped -0.0053 to 0.251.

US non-farm payroll grew 372k, unemployment rate unchanged at 3.6%

US non-farm payroll employment rose 372k in June, well above expectation of 250k. That’s in line with the average monthly gain over the prior three months at 383k. Total non-farm employment was still down by 524k, or -0.3%, from pre-pandemic level in February 2020.

Unemployment rate was unchanged at 3.6%, matched expectations. Number of unemployed persons was essentially unchanged at 5.9m, comparing to prepandemic level at 5.7m in February 2020. Labor force participation rate ticked down form 62.3% to 62.2%.

Average hourly earnings rose 0.3% mom, matched expectations.

Canada employment dropped -43k, unemployment rate dropped to 4.9%

Canada employment dropped -43k, or -0.2% in June, much worse than expectation of 20k growth. Services-producing jobs dropped -76k while goods-producing jobs rose 33k.

Unemployment rate dropped from 5.1% to 4.9%, below expectation of 5.1%. Participation rate dropped -0.4% to 64.9%.

Total hours worked rose 1.3%. Average hourly waves rose 5.2% yoy.

USD/JPY Mid-Day Outlook

Daily Pivots: (S1) 135.62; (P) 135.92; (R1) 136.29; More…

USD/JPY recovers but stays below 136.99 resistance. Intraday bias remains neutral first. On the upside, sustained break of 136.99 will resume larger up trend to 100% projection of 114.40 to 131.34 from 126.35 at 143.29. On the downside, however, break of 134.25 will turn bias to the downside for deeper pull back to 131.34 resistance turned support.

In the bigger picture, current rally is seen as part of the long term up trend from 75.56 (2011 low). Next target is 100% projection of 75.56 (2011 low) to 125.85 (2015 high) from 98.97 at 149.26, which is close to 147.68 (1998 high). This will remain the favored case as long as 126.35 support holds.

Economic Indicators Update

GMT Ccy Events Actual Forecast Previous Revised
23:50 JPY Bank Lending Y/Y Jun -0.50% 0.90% 0.70%
23:50 JPY Current Account (JPY) May 0.01T 0.16T 0.51T
05:00 JPY Eco Watchers Survey: Current Jun 52.9 55 54
06:45 EUR France Trade Balance (EUR) May -13.0B -12.5B -12.2B -12.7B
08:00 EUR Italy Industrial Output M/M May -1.10% -1.10% 1.60% 1.40%
12:30 CAD Net Change in Employment Jun -43.2K 20.0K 39.8K
12:30 CAD Unemployment Rate Jun 4.90% 5.10% 5.10%
12:30 USD Nonfarm Payrolls Jun 372K 250K 390K 384K
12:30 USD Unemployment Rate Jun 3.60% 3.60% 3.60%
12:30 USD Average Hourly Earnings M/M Jun 0.30% 0.30% 0.30% 0.40%
14:00 USD Wholesale Inventories May F 2.00% 2.00%

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