North American Summary and Highlights 7 February

North American session

US non-farm payrolls were weaker than expected with a rise of 143k but the USD saw only a momentary dip with average hourly earnings stronger than expected with a rise of 0.5% and unemployment falling to 4.0% from 4.1%. Fed speakers Kashkari, Goolsbee and Kugler all later stated the labor market remained healthy. A dip in the Michigan CSI, in particular a sharp rise in the 1-year inflation view to 4.3% from 3.3%, saw equities and USD/JPY dip. 

Equity weakness extended on a Reuters report that Trump planned to issue reciprocal tariffs against unnamed countries, which saw USD/JPY extend losses to see lows below 151 but the USD bouncing elsewhere. Trump later confirmed that next week would see measures taken on many countries. USD/JPY rebounded to around 151.40, but EUR/USD was the main loser, falling to 1.0330 after briefly touching above 1.04 on the US employment data. USD/CAD, after slipping below 1.43 assisted by a strong 76k increase in Canadian employment, corrected on the tariff report, but later fell back to touch fresh lows for the day.  

European morning session 

USD/JPY and USD/CHF moved modestly higher in a quiet European morning, while GBP/USD also made small gains. Most other USD pairs were little changed. USD/JPY gained around 30 pips to 152.10, while EUR/CHF gained 10 pips to 0.9415. GBP/USD rose 25 pips to 1.2450.  

News was thin on the ground. German data early on saw weaker than expected December industrial production, which fell 2.4% m/m, but the underlying trend remained quite static after a 1.3% gain in November. German trade data showed a larger than expected EUR 20.7bn surplus in December, but the data had no significant impact. EUR/USD did gain around 20 pips from opening levels to reach 1.04 in mid-session, but fell back by the end of the morning.