The U.S. dollar strengthened modestly across the board overnight, but remains in familiar ranges against its European counterparts. However, today’s U.S. economic data is likely to cause renewed volatility.
The greenback initially shot higher following the release of data, but has since retreated. U.S. employers added the most workers in four months while wage growth slowed more than projected. Payrolls increased 227K jobs, beating expectations of 175K and higher than last months revised 157K. While the headline should be dollar-positive, a deeper look reveals a more “mixed” result. Average hourly earnings rose by 2.5% year over year, failing to miss estimates of a 2.7% reading. Last month’s print of 2.9% was also downwardly revised to 2.8%. The unemployment rate rose to 4.8% from 4.7%.
Later this morning, Markit and ISM service data and durable goods will cross the wires but will be considered secondary data compared to this morning’s jobs data.
Unless, the dollar can pick up steam throughout the day, the Bloomberg Spot Dollar Index will close lower for a sixth consecutive week. That would be the longest losing streak since August 2010.
The Euro was unable to build on gains from yesterday’s session despite the release of positive fundamental data released in the EU. Final Eurozone service PMI beat expectations, led by gains in Germany in France. However, Italian PMI fell, showing a disparity between the some of Europe’s biggest economics.
The Euro is on track to close the week up against the U.S. dollar as the markets continue to absorb comments from the Trump administration that have accuse Europe of artificially undervaluing their currency.
The Sterling is also lower against the U.S. dollar today following the release of lukewarm PMI data. The service index dropped to 54.5 from 56.2 from the month prior. The reading also failed to meet estimates for a 55.8 print. A reading above 50.0 shows an expansion.
We will continue to keep an eye on political developments out of the U.K. as Prime Minister Theresa May looks on track to invoke Article 50 next month.