U.S payrolls were a game-changer

The dollar climbed against major peers today, reaching a four-month high versus the euro, as traders positioned for an earlier tapering of Federal Reserve stimulus. The greenback strengthened as far as $1.1742 to the single currency, extending a 0.6% pop from Friday when a strong U.S jobs report stoked bets that a reduction in asset purchases could start this year and higher interest rates could follow as soon as 2022. 

The dollar index, which tracks the U.S currency against six rivals, rose to a two-week top 92.915. The dollar also hit an almost two-week high of 110.37 yen. U.S payrolls were a game-changer. The dollar index is eyeing a close above 93, while the currency could head for $1.1704 per euro, Weston wrote, adding that it could climb further versus the yen too should U.S yields continue to tick higher. The benchmark 10-year Treasury yield jumped 8 basis points on Friday to a two-week high of 1.3053%.

There was no trading in Tokyo today with Japan shut for a national holiday. Singapore markets were also closed. Friday's non-farm payroll report showed jobs increased by 943,000 in July compared with the 870,000 forecast by economists in a Reuters poll. Numbers for May and June were also revised up. The Fed has made the labor market recovery a condition of tighter monetary policy, and most officials back the view that a jump in inflation will prove transitory, though there is debate over how prolonged it could be. 

Traders will be keenly watching a U.S consumer price report on Wednesday. Last week, Fed vice-Chair Richard Clarida suggested that conditions for hiking interest rates might be met as soon as late 2022. 

The Australian dollar eased slightly against a broadly stronger greenback on Monday, as lower commodity prices and continued lockdowns in the country hurt sentiment, while the Kiwi also came under selling pressure but had recovered by midday. Lower prices for iron ore, one of Australia’s main exports, prices and the strength of its American counterpart following strong U.S. jobs data combined to get the Aussie off to a weaker start. Australia’s most populous state of New South Wales expanded its COVID-19 lockdown to another rural town today due to concerns the virus may be spreading from Sydney into the countryside. 

Meanwhile, iron ore futures slumped more than 5%, pressured by prospects of improved supply and weakening Chinese demand, and oil prices eased further amid worries coronavirus travel restrictions would threaten bullish expectations for demand. Over the weekend we had yet more evidence that Chinese demand for iron ore really is waning with July imports being the lowest in 14 months and on seasonally adjusted basis imports hit 16-month lows.

Euro

The single currency fell on Friday as fears around the coronavirus Delta variant, concern that economic recovery is peaking, investors reversing bets against safe-haven bonds, and an accommodative tone among central banks all pushed yields sharply lower across the world in July. The ECB adopted a symmetric 2% inflation target in July. 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 traders positioned for an earlier tapering of Federal Reserve stimulus. The greenback strengthened, extending a 0.6% pop from Friday when a strong U.S jobs report stoked bets that a reduction in asset purchases could start this year and higher interest rates could follow as soon as 2022. 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 was steady on Friday, holding close to the four-month high. The British currency has been a strong performer in recent weeks as COVID-19 cases - while still high - have fallen and high vaccination rates have allowed the British government to lift most social distancing rules. Currency markets were generally quiet ahead of U.S employment data. 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 weakened against its U.S counterpart on Friday as oil prices fell and investors were more impressed by jobs data in the United States than in Canada, with the loonie adding to this week's decline. Canada added 94,000 jobs in July, far fewer than expected, though most of the gains were in full-time work. 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 eased slightly against a broadly stronger greenback today, as lower commodity prices and continued lockdowns in the country hurt sentiment, while the Kiwi also came under selling pressure but had recovered by midday. Lower prices for iron ore and the

strength of its American counterpart following strong U.S jobs data combined to get the Aussie off to a weaker start 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%.

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