US FX WRAP: Dollar hit on weaker-than-expected NFP report
Newsquawk Staff ·
USD was broadly sold on a softer-than-expected NFP print, with suspected JPY intervention exacerbating the move from a DXY perspective. Payroll growth was 57k in June, shy of the expected 110k, with the net-two month revisions at -74k. The unemployment rate unexpectedly ticked lower to 4.2% from 4.3%, however, accompanied by a drop in the participation rate to 61.5% from 61.8%. USD immediately weakened on the report, with the DXY hitting lows of 100.56. Some of the move has been pared at the time of writing, likely given its one data point in a new Fed Chair environment, where Warsh pays attention to trends, which for now shows an improving labour backdrop since March. In other news, claims were little changed W/W, geopolitical developments have been light, and equities continue to see increased volatility as semiconductors/memory names continued to face pressure. Friday marks Independence Day, and as such, trading conditions are set to be thinner.
JPY led G10 strength against the broad USD weakness, outperforming on potential JPY intervention in European trade. The sharp downside and its magnitude would suggest intervention over a rate check, with the focus turning towards remarks from Japanese officials for any confirmation. Officials this week have engaged in jawboning, including the Top FX Diplomat and Finance Minister, albeit with little success. Additionally, the moves follow reports on Monday that the Japanese government is expected to call for “appropriate” monetary policy, aiming to dissuade the BoJ from further rate hikes. USD/JPY wiped out last week's gains, hitting lows of 160.62 before bouncing to 161.12.
Cable is now in a six-day rally, trading at 1.3344, as it looks to test the 200 DMA of 1.34. Updates included remarks from the likely new UK PM Burnham, who said he will stick to the Labour manifesto on tax; has not made up his mind on who his chancellor will be.
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