The US dollar suffered a sharp selloff against its forex rivals in recent trading, thanks to weaker than expected NFP data. The report showed a 223K increase in hiring versus the projected 231K figure while average hourly earnings showed a flat reading. The jobless rate improved from 5.5% to 5.3% but this was just a result of a sharp drop in the participation rate and a reduction in the labor force. Underlying data such as the U6 and long-term unemployment showed gradual improvements, but the weak headline figures still convinced most traders to delay rate hike projections for December. US banks are closed for the Fourth of July long weekend holiday today.
The euro managed to regain a bit of ground to the US dollar and the commodity currencies, thanks to bleak economic data from those economies. Opinion polls ahead of the Greek referendum this weekend show mixed results but most are indicating that the actual vote could come down to the wire. Spanish unemployment change data was weaker than expected yesterday while today has the euro zone retail sales on tap.
The pound managed to draw some support from stronger than expected construction PMI, as the reading jumped from 55.9 to 58.1 in June. Today, the services PMI is up for release and it might have a stronger impact on pound action since the sector contributes a larger share to overall economic growth. The reading is expected to climb from 56.5 to 57.4 in June.
The franc continued to advance in recent trading, despite the lack of top-tier data from Switzerland. Traders might take their cues from the results of the Greek referendum over the weekend, although franc-buying might be limited due to the SNB’s pledge to keep the currency weak.
The yen gave up a bit of ground in recent trading as risk appetite managed to return to the markets and traders booked profits ahead of the weekend event risk. There have been no economic reports released from Japan yesterday and none are due today, leaving market sentiment in the driver’s seat.
Commodity Currencies (AUD, NZD, CAD)
The Australian dollar was weighed down by weaker than expected retail sales data from Australia, as the country reported a 0.3% uptick in consumer spending versus the projected 0.5% gain. To top it off, the previous report was downgraded to show a 0.1% decline in consumer spending. Chinese equities are on the decline today, prompting calls for further PBOC easing. No other reports are lined up from the comdoll economies for the rest of the day.
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