North American Summary and Highlights 7 August
Overview - The USD fell on a weaker than expected US employment report. CAD was particularly strong with Canada’s employment report exceeding expectations.
North American session
July’s US non-farm payroll was clearly weaker than expected, a fall of 23k with downward revisions to May and June, though private sector payrolls increased by 30k, matching the revised June. Unemployment slipped to 4.1% from 4.2% in a decline in the labor force but this does not seem to be generating any inflationary pressure in average hourly earnings, which increased by only 0.1%.
The USD slipped sharply on the release with only a modest correction from the lows overall. USD/JPY fell from above 158 to below 157, and while a significant correction was seen, with UST yields also moving off their lows, it stalled ahead of 158. EUR/USD bounced to 1.1580 from 1.1530 before correcting to 1.1570. EUR/GBP erased European gains but EUR/CHF sustained European losses.
July’s Canadian employment report was significantly stronger than expected, surging by 75.1k with unemployment falling to 6.4% from 6.5% despite a rise in the labor force. USD/CAD fell to 1.3950 from above 1.40 on the data and subsequently marginally extended its losses. AUD/CAD however was little changed as AUD/USD picked up to .7070 from .7040.
European session
Flat trade this morning in consolidation, reinforced by the wait for not only Iran news but the key US payrolls release shortly. Consensus for that is around 80k on the headline and unchanged on the unemployment rate.
Oil just the firm side of flat, slightly off earlier highs, equities a little firmer. Nasdaq + ½ %, USTs broadly flat after yesterday’s yield bounce.
Main interest actually still in precious metals where we have been suggesting scope for an upside break out of recent basing. Silver in particular looks to be achieving that, if sustained, with a 4.7% gain today that clears through and away from 64~.
German June industrial output 0.2%m/m (mkt 0.1%), flat yr/yr. UK Lloyds house prices 0.1%y/y from 0.6% (mkt 0.4%).