The devil is in the data details

The Devil Wears Prada and, apparently, plays a role in economic statistics. FX markets dismissed the opening salvos of the China/America (ChinAm) trade war as “old news.”  They didn’t feel the same way about this morning’s US employment and merchandise trade reports.

US nonfarm payrolls rose 213,000 in June, beating the forecast for a 195,000 gain. A rise in the jobless rate to 4.0% from 3.8% was attributed to more unemployed workers looking for jobs.  Average Hourly Earnings were a tad softer.  The US Trade deficit narrowed to a 1 ½ year low.

EURUSD rallied, rising from 1.1703 to 1.1762, in part because a strong report was expected. The break above the 1.1725-30 area triggered weak stop-losses and  encouraging positions were trimmed ahead of the weekend.  A break above 1.1770 would extend gains to 1.1860.

The rest of the G-10 majors managed to post gains at the expense of the US dollar except for the Canadian dollar. It had its own data issues. The Canadian employment report was better than expected. Canada gained 21,800 jobs, but most of them were part-time. Canada’s trade deficit widened, and exports were weaker than expected.  USDCAD chopped about in a 1.3080-1.3152 range with both sides tested when the data was released. Today’s data will not derail the expected Bank of Canada rate hike on July 12.  However, trade war concerns suggest support in the 1.3050-1.3180 area will hold.

Wall Street is staying close to home.  The DJIA is now slightly in the red while the S&P 500 is a tad higher. President Trump’s response to China’s retaliatory tariffs may limit gains today.


Chart: USDCAD 4-hour with uptrend line and support highlighted