North American Summary and Highlights 2 August
Overview -
The USD fell sharply with UST yields after weaker than expected US employment data, led by USD/JPY though the commodity currencies were little changed with equities also plunging.
North American session
July’s non-farm payroll was weaker than expected with a 114k rise overall, 97k in the private sector, with weak details across the board, 29k in net negative revisions, a 0.2% rise in average hourly earnings, a lower workweek and a surprisingly sharp rise in unemployment, to 4.3% from 4.1%.
UST yields plunged and the USD instantly sold off, led by USD/JPY which fell from near 149 to near 146.50. EUR/USD rose above 1.09 from 1.0835 and GBP/USD rose above 1.28 from 1.2750. EUR/GBP extended gains to .8520 but EUR/CHF fell to .9375 and EUR/JPY saw lows below 160 from near 161.50 before the US data. With equities falling sharply the commodity currencies struggled to hold on to their initial gains, with USD/CAD and AUD/USD ending little changed.
European morning session
The USD lost a little ground through the European morning, with USD/JPY dropping around 20 pips to 148.80 and EUR/USD gaining 20 pips to 1.0820. There was also a sharp rise in EUR/NOK, gaining 10 figures to 11.91, while EUR/SEK was also dragged a couple of figures higher. The cause of NOK weakness was unclear. There was slightly higher than expected Norwegian July unemployment reported, but this doesn’t look to have been the trigger for NOK weakness.
Datawise we saw Swiss CPI for July come in as expected at 1.3% y/y. EUR/CHF was slightly higher, bouncing off support at 0.94. Otherwise French industrial production rose 0.8%, slightly less than expected in June, while Italian production was a bit stronger than expected at 0.5% m/m.