USD recovers a little on employment data

After a disappointing ADP report earlier in the week, Friday brought the official July US employment data and the US of A added 943,000 new non-agricultural jobs in July. In addition, the unemployment rate fell to 5.4%. Both stats are significantly better than forecast and the US Dollar reacted as predicted and strengthened across the board. GBPUSD is half a cent lower at $1.3880 this morning and EURUSD rate is down to $1.1755 at the time of writing. The next hurdles for the USD are today’s JOLTS job openings data and Wednesday’s consumer price inflation data.

That US Dollar strength reflects the market expectations that improved employment data will hasten tighter monetary policy in the US. The head of the Dallas Federal Reserve has already called for precisely that. Gold weakened on the news as well and that has implications for the countries that export gold.

Canada employment data misses forecasts

Speaking of which, Canada has reopened its borders to fully vaccinated US visitors for the first time in 18 months. That aside, Canada’s jobs growth was less expansive than expected in July. They did add 94,000 fresh jobs but that was more than 30% lower than the markets had been expecting. However, it did bring the unemployment rate down to 7.5% to match the March data. Additionally, the Ivey purchasing managers index showed a slowdown in growth. The 56.4 reading on the index is still in the growth zone but not as robust as the previous 71.9. The GBPCAD exchange rate remains reasonably elevated just above CAD 1.7400.

AUD continues to weaken as gold slips

The Sterling – Australian Dollar rate is also elevated. Undoubtedly the gold drop will have impacted gold exporting Australia but there are other factors at play here as well. Not least the ongoing covid problems in parts of Australia. GBPAUD is up above AUD 1.8850 this morning and looking to be on an upward tilt.

The NZ Dollar will be active tonight when the credit card spending data is released for July. It is a useful measure of consumer activity and indebtedness. GBPNZD is up a cent on the dip we saw last week but this morning’s NZD 1.9760 is still shy of the magic 2.00, craved by so many NZD buyers. Whether it will get there is a moot point right now.

The big event for GBP traders this week is Friday’s economic growth data. Gross domestic product is expected to have grown by 22% from Q2 2020 to Q2 2021 and the forecast is for an increase of something like 4.8% in the three months to June. If true, that is a solid recovery from a locked-down Q2 last year but I suspect it won’t be enough to bring the Bank of England’s monetary policy tightening forward. If the data is stronger than the forecasts though….well who knows. However, that would prompt further GBP buying. So those with Sterling to purchase may wish to act early in the week if they prefer to avoid that kind of risk.

And the Olympic games are over until the Paralympics starts in 15 days. Until then, I am not sure what we are all going to do with our newfound in-depth knowledge of skateboarding, Still; it’s only 3 years before the next Olympics, so maybe we can retain some understanding of what a backside nollie with a switch to a front side fakie grind means. Or maybe I don’t know anyway.

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