North American Summary and Highlights 6 September
Overview - US employment data was weaker than expected but probably not sufficiently so to see the Fed easing by 50bs in September. USD/JPY ended weaker but the USD advanced against the riskier currencies.
North American session
The US non-farm payroll rose by a slightly weaker than expected 142k with a significant 86k in net negative revisions. However unemployment corrected lower to 4.2% from 4.3% and average hourly earnings were above consensus with a 0.4% increase. The USD initially dipped before rebounding and eventually finished mixed, with the riskier currencies underperforming.
USD/JPY slipped from above 143 to 142 on the data before rebounding to 144, eventually settling slightly below 142.50. EUR/USD was little changed, but finished marginally below 1.11 after being marginally above before the data. EUR was stronger versus the GBP and weaker versus the CHF.
Canadian employment saw a near consensus 22.1k increase but with full time work falling, unemployment rising to 6.6% from 6.4% and wage growth slower the detail was weak. USD/CAD picked up above 1.3550 from 1.35 though AUD/CAD ended weaker near .9050 after initially bouncing above .91 on the data.
Fed’s Williams and Waller both stated that easing was now appropriate. Williams gave no view on by how much, needing to look more at the data. Waller was quite dovish, seeing the balance of risk shifting towards employment and suggesting he was ready to ease aggressively should data weaken further, but appeared to favor moving by 25bps in September.
European morning session
JPY paused in Europe after further good gains in Asia. Apprehension in global equity markets is driving the latest leg of JPY gains, alongside further narrowing in U.S.-Japan bond yield spreads. Similar moves are occurring against EUR and GBP, though the CHF is seeing less losses in the past few days as it also benefits in this more risk adverse environment/worries over a U.S. harder landing.
Other currencies were subdued in Europe, though the NOK and SEK made small technical gains.