Fxmarket – USD Drops After US Jobs Report

Nonfarm payrolls had spiked by 224,000 last month beating the general expectation for 160000. This was also a sharp recovery from a lower placement of 72000 in the month of May

The data boosted the U.S. dollar in the foreign exchange markets on Friday, sending the currency to a three-week peak of 96.968, before shedding some of its gains on Monday.

The U.S. Dollar index which places the currency against a basket of other currencies, traded at 96.792, down 0.1%

The solid jobs report reduced the possibility for a Fed rate cut in July. Hitherto, traders had high expectations that the central bank would cut rates in July by 25-basis points and make a total of three rates cuts by the end of the year. The rate cuts would help mitigate the longstanding U.S. trade disputes that would otherwise have an effect on the economy.

The EUR/USD currency pair was little changed and stood at 1:1227. The fact that German industrial mandates fell more than anticipated weakened the Euro. The German economy ministry sounded a warning that the sector will remain fragile in the next few months.

The USD/JPY currency pair fell to 108.31, a figure representing 0.1% decline. The Cabinet Office announced that the nation’s core orders fell by nearly 8% in May from previous months.

The reading was similar to the expected drop by 4.7%, which was trailed by a 5.2 increase in April.

In a separate announcement, Bank of Japan Governor, Mr. Haruhiko Kuroda said he expects the economy to tick up and steadily push down the inflation rate to the Central Bank’s 2% expected mark.

In addition, the country’s central bank will make necessary policy adjustments to keep up the economy’s momentum and drive it towards achieving the inflation goal.

The AUD/USD pair traded higher at 0.6990, 0.2% higher. The rise comes after investor sentiment improved following the appointment of new European Central Bank head, Christine Lagarde who is expected to take a dovish stance on policy. The new appointment took the euro yields to a trough.

The appointment also added to speculations about global policy easing with the foreign exchange market increasing the likelihood of half-point rate cuts from the Federal Reserve by the end of the month.

The greenback took a hit when President Donald Trump insisted that the United States should ramp up its efforts to match with China and Europe’s currency manipulation. This sees them pump money into their economies.

Those remarks helped the Aussie offset some worse-than-expected economic data. Australia’s retail sales increased 0.1% in May after dipping 0.1% in April. This was also in line with the worst unemployment numbers from February, the first drop since mid-2016.

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