Daily FX Trading Update: Liquidity Light on US Labor Day Holiday

The US dollar returned a lot of its recent gains to its counterparts when the NFP reading turned out weaker than expected. The economy added 151K jobs in August, lower than the projected 180K figure, but the previous reading was upgraded from 255K to 275K. The unemployment rate was unchanged at 4.9% instead of improving to the estimated 4.8% reading while average hourly earnings indicated a 0.1% uptick instead of the estimated 0.2% gain. US banks are closed for the holiday today.
The euro took advantage of dollar weakness but weakened against most of its other counterparts even when euro zone data came in line with expectations. The Spanish unemployment change figure came in at 14.4K while PPI rose 0.1%. Final services PMI readings are due today, along with the region’s Sentix investor confidence index.
The pound was able to rake in more gains at the end of the week after the UK construction PMI also showed stronger than expected results. The reading rose from 45.9 to 49.2 to show a slower pace of industry contraction versus the projected rise to 46.6. The services PMI is due today and a rise from 47.4 to 49.1 is eyed, although another upside surprise might be seen.
The franc took advantage of dollar and euro weakness but was no match to pound strength. There were no reports out of the Swiss economy then and none are due today, which suggests that the franc could keep taking its cue from risk sentiment.
The yen capped off the week with a continued losing streak as dovish BOJ sentiment kept dragging the currency down. Japan’s consumer confidence index rose from 41.3 to 42.0, better than the projected 41.6 figure. Average cash earnings rose 1.4% year-over-year versus the estimated 0.5% gain. BOJ Governor Kuroda has a testimony lined up and more downbeat remarks could keep a lid on the yen’s gains.
Commodity Currencies (AUD, NZD, CAD)
The comdolls were able to benefit from the selloff in the dollar, as lower odds of a Fed hike in September brought a bit of risk appetite back to the table. Canada’s trade balance and quarterly labor productivity data also beat expectations. Medium-tier reports from Australia such as the MI inflation gauge, quarterly company operating profits, and ANZ job advertisements are due while New Zealand has its ANZ commodity prices report on the docket. Canadian banks are closed for the holiday.
To contact the reporter of the story: Samuel Rae at samuel@forexminute.com
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Samuel Rae is an active retail trader across a variety of assets, including currencies, stocks and commodities and the author of Diary of a Currency Trader (Harriman House). His personal strategy focuses primarily on classical technical charting patterns with a fundamentally supportive bias, combined with a strict, risk management-driven approach to entries and exits. He is an Economics graduate from Manchester University, UK.