he US Dollar has reversed course dramatically this morning after the nonfarm payrolls report sparked another significant change to speculation on when the Fed may start raising interest rates.
Nonfarm payrolls not only grew less than expected but last month was revised sharply downward and wage pressures eased, all taking the pressure off the Fed to start raising rates.
Recent speeches by Fed Governor Powell and Vice President Fischer had suggested the Fed remains data dependent and that rate increases were still likely this year. As is was, increasing financial turmoil in Greece and Puerto Rico had made rate hikes this summer questionable, and this data pretty much takes a rate liftoff off the table for September. One rate hike remains possible for late in the year as the Fed did when it started tapering in December of 2013.
With USD falling, gold has staged a significant bounce up off of $1,160 per ounce pulling CHF higher with it. EUR is also now positive on the day, while a number of other currencies have trimmed their losses against the greenback. SEK has fallen to the bottom of the standings after the Riksbank announced another surprise interest rate cut deeper into negative territory.
Energy commodities are trading higher today while the grains group has dropped back a bit. Energy could be active later this morning with natural gas storage due while the weekly Baker Hughes rig count is out a day early ahead of the US holiday tomorrow.
Speaking of which, in addition to reacting to nonfarm payrolls, it’s the last day for trading on US exchanges ahead of Sunday’s referendum in Greece. This means that we may also see traders positioning through the day for a potentially active start to next week.
There have been no major corporate announcements this morning
Significant announcements released overnight include:
US nonfarm payrolls 223K vs street 233K
US nonfarm payrolls revision May cut to 254K from 280K
US unemployment rate 5.3% vs street 5.4%
US participation rate 62.6% vs street 62.9%
US average hourly earnings 2.0% vs street 2.3%
US jobless claims 281K vs street 270K
Sweden interest rate surprise 0.10% cut to (0.35%)
UK Nationwide house prices 3.3% vs street 4.5%
UK construction PMI 58.1 vs street 56.5
Spain unemployment change (94K) vs street (125K)
Upcoming significant announcements include:
9:30 am EDT Canada manufacturing PMI previous 49.8
10:00 am EDT US factory orders street (0.5%)
10:30 am EDT US natural gas street 71 BCF
1:00 pm EDT US Baker Hughes drill rig count previous 859
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