Daily Market Update

Jobs Numbers Mostly Disappoint

August 03, 2018

The U.S. dollar showed some signs of life yesterday and reached a two-week high against the Euro.

Overview

The greenback’s momentum carried over into the overnight session but those gains have mostly disappeared. Nevertheless, the Bloomberg Dollar Spot Index is headed for its first weekly gain in a month.

This morning’s economic docket provided a mixed outlook the country’s employment situation but should allow the greenback to hold its modest gains. U.S. payrolls only increased 157K in July, missing estimates of a 193K job gain. However, June’s numbers were upwardly revised which lessened the blow of today’s headline number. Average hourly earnings rose a modest 0.3%, matching expectations, showing that wage growth remains sluggish and a concern considering the labor market continues to tighten. The unemployment rate ticked lower to 3.9%. The participation rate has remained near 62% for years as baby boomers retire and others re-enter the job market.

 

EUR

The Euro experienced a steep drop overnight and briefly touched its lowest level in a month. However, the common currency has since clawed back its losses and is trading near familiar ranges from earlier this week. The Euro area Purchasing Managers’ Index for manufacturing and services were released today and disappointed. The index came in at 54.3 ceding most of the ground in gained last month and indicating growth in the future might be sluggish.

 

GBP

Sterling remains under pressure even after the Bank of England raised interest rates earlier this month. Bank of England Governor Mark Carney stirred up a bit of a political storm when he said that the risk of a no-Brexit deal was “uncomfortably high” and “highly undesirable.”

A report also showed that the U.K. service sector grew at a slower pace than economists had forecast in July. The sterling is set for its fourth weekly decline against its American counterpart and is currently trading at its weakest levels since July 19th.

 

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