The much better than forecast June U.S. jobs report at 287K print V 175K expected and a dismal 11K (revised down) prior saw the dollar initially rally broadly, though ahead of the weekend the market quickly booked profits and sold into the gains. EUR-USD dove from 1.1080 into the 1.1000 level, before rallying back to 1.1120, as USD-JPY popped 100 points to near 101.30, before falling back to 100.00. The greenback subsequently turned sideways just above opening levels. Cable ran into sellers on its brief move over 1.3000, before finding support ahead of 1.2900. USD-CAD was dragged higher on a soft Canada jobs report, and on softer oil prices, posting near two-week highs of 1.3090.
EUR-USD steadied just under opening levels, currently at 1.1040, after initially falling to 1.1002 lows, then ramping up to session highs of 1.1120 in the aftermath of the jobs report. The lowering of IMF EU growth forecasts due to Brexit likely added some weight to the pairing, though on going Brexit uncertainty should keep the euro in sell-the-rally mode for the foreseeable future.
USD-JPY remains heavy, despite the better risk backdrop post-jobs data, dipping briefly to 100.00, levels last seen following the Brexit vote outcome. Brexit fallout will continue to keep the market nervous, which in turn should keep the safe haven yen underpinned. The pairing has since rallied over 100.80, likely as shorts are covered into the weekend. The prospects of intervention remains real, especially under the key 100 level, and will keep USD-JPY shorts on their toes.
Aside from the brief bounce in the aftermath of the U.S. jobs report, the pound traded softer on Friday, with Cable having ebbed to the low 1.29s and EUR-GBP having lifted above 0.8570. Signs of weakening UK business and consumer sentiment, and an ebb in economic activity are keeping a lid on the pound. A survey of UK consumer confidence by Gfk, conducted after the Brexit vote (between June-30 to July-5), dove to -9 from -1, which is the sharpest drop in the data series since 1994. Think tank NIESR said yesterday that it estimates UK GDP went negative in June after stagnating in May.
EUR-CHF has recouped to the 1.0800-1.0900 area, above the post-Brexit 10-month low at 1.0623 (seen on June 24). The SNB confirmed that it had intervened in EUR-CHF in the day following the Brexit vote. The central bank stated that it has “intervened in the foreign exchange market to stabilise the situation and will remain active in that market.” The SNB said last month after its quarterly policy review that it has been monitoring the impact of the Brexit issue on the “significantly overvalued” franc.
USD-CAD rallied to nearly two-week highs of 1.3090 following the mix of data, which revealed a better than expected U.S. jobs report, and a softer Canadian employment outcome. In addition, oil prices remained near the bottom of a two-month range, with WTI crude idling near $45.50, after dipping under $45.00 on Thursday. The 1.3100-20 band becomes resistance, and represents various tops seen in June.