The whisper number for Friday’s non-farm payrolls report is a million jobs

The U.S dollar ended the day sharply higher against all of the major currencies but not before wild swings that took USD/JPY below 109.00 and then back above 109.50. EUR/USD soared to 1.1900 at the start of the NY open but plunged towards an intraday low of 1.1836 before the London close. We haven’t seen big intraday reversals like this in a while and the culprit was non-farm payrolls confusion. Private payroll provider ADP reported significantly slower job growth in the month of July that sent the dollar tumbling lower but when non-manufacturing ISM was released, investors were relieved to see service-sector job growth.

After contracting the previous month, the employment component of non-manufacturing ISM rose to 53.8 from 49.3. The PMI index rose to 64 from 60.1, a new record high that sent the dollar soaring higher. The whisper number for Friday’s non-farm payrolls report is a million jobs. The market had a violent reaction to both reports because the outcome will have a significant impact on how the U.S. dollar trades for the next few weeks leading into the Federal Reserve’s Jackson Hole summit. If the data is good, the dollar will soar on the prospect of a taper announcement later this month. 

However, if payroll disappoints, the dollar will slide as investors push their expectations for the taper to September or later. Fed President Clarida said that he can certainly see the Fed announcing a taper this year if conditions for substantial progress are met. The impact of FX policy divergences on currencies is growing. Calls by local banks for a series of interest rate hikes in New Zealand drove the New Zealand dollar to its strongest level in nearly a month before U.S. dollar strength stripped away the gains.

Still, NZD was the only major currency to end the day higher versus the USD. The European Central Bank’s dovishness sent the euro tumbling against most of the major currencies. Of course, it didn’t help that Eurozone retail sales rose less than expected and the Composite and Services PMI indices were revised lower. Looking ahead, the main focus today will be the Bank of England’s monetary policy announcement. Like the Fed, U.K policymakers believe that inflation increases are transitory.

Euro

The single currency traded higher as Eurozone business activity roared in July, expanding at its fastest pace in 15 years, as the lifting of more coronavirus restrictions and an accelerated vaccine drive injected life into the bloc's dominant service industry, a survey showed. IHS Markit's final composite Purchasing Managers' Index (PMI) climbed to 60.2 last month. Overall, the EUR/USD traded with a low of 1.1852 and a high of 1.1892 before closing the day around 1.1862 in the New York session.

Yen

The Japanese Yen steadied as the dollar recovered quickly from a fall when comments from a top U.S Federal Reserve official appeared to suggest that the central bank may reduce support for the improving economy more quickly than widely thought. The official's bullish comments on the U.S economy triggered a rebound in U.S Treasury yields. Overall, the USD/JPY traded with a low of 108.85 and a high of 109.32 before closing the day around 109.02 in the U.S session.

British Pound

The British Pound steadied around $1.39 against the dollar yesterday, buoyed by risk sentiment in markets, optimism over the outlook for COVID-19 in Britain and some anticipation of a hawkish turn from the Bank of England when it meets on Thursday. Britain’s pound has rebounded after most lockdown measures in England were dropped on July 19. Overall, the GBP/USD traded with a low of 1.3878 and a high of 1.3936 before closing the day at 1.3914 in the New York session.

Canadian Dollar

The Canadian Dollar edged lower against its U.S counterpart yesterday along with a two-week low for oil prices, but the currency stuck to a narrow range ahead of key economic data through the rest of the week. The price of oil, one of Canada's major exports, settled 3.4% lower at $68.15 a barrel, pressured by a surprise build in U.S stocks. Overall, USD/CAD traded with a low of 1.2486 and a high of 1.2573 before closing the day at 1.2535 in the New York session.

Australian Dollar

The Australian Dollar initially rallied during the trading session as we continue to see hope slip back into the markets. Having said that, we have also given back some of the gains above the 0.74 level, so it does suggest that perhaps we may have a bit of ugliness ahead of us. If that is going to be the case, then the Aussie dollar will be one of the first currencies that people sell. Overall, AUD/USD traded with a low of 0.7408 and a high of 0.7485 before closing the day at 0.7421 in the New York session.

Euro-Yen

EUR/JPY is trading below 14, 50 and 100 days moving average. Fast stochastic is giving a bearish tone and MACD is also issuing a bearish stance. The Relative Strength Index is above 48 and lies below the neutral zone. In general, the pair has lost 0.29%.

Sterling-Yen

Currently, GBP/JPY is trading above 14, 50 and 100 days moving average. Fast stochastic is issuing a bearish tone and MACD is also indicating a bearish stance. The Relative Strength Index is above 52 reading and lies below the neutral zone. On the whole, the pair has lost 0.02%.

Aussie-Yen

Currently, the cross is trading below 14, 50 and 100 days moving average. Fast stochastic is giving a bearish tone and MACD is also indicating a bearish stance. The Relative Strength Index is above 40 reading and lies below the neutral region. In general, the pair has gained 0.20%.

Euro-Sterling

This cross is currently trading below 14, 50 and 100 days moving average. Fast stochastic is indicating a bearish tone and MACD is issuing a bullish signal. The Relative Strength Index is above 44 and lies below the neutral region. Overall, the pair has lost 0.27%.

Sterling-Swiss

This cross is trading above 14 and below 50, 100 days moving average. Fast stochastic is issuing a bullish stance and MACD is also indicating a bullish tone. The Relative Strength Index is above 50 and lies below the neutral region. In general, the pair has gained 0.08%.

###

All information has been prepared by TraderFactor or partners. The information does not contain a record of TraderFactor or partners prices or an offer of or solicitation for a transaction in any financial instrument. No representation or warranty is given as to the accuracy or completeness of this information. Any material provided does not have regard to the specific investment objective and financial situation of any person who may receive it. Past performance is not a reliable indicator of futures performance.