Dollar bulls cheer NFP, Wall Street doesn't
FX Trader, Loonieviews.net
The greenback took a shine to the better-than-expected US employment report. Nonfarm payrolls rose 201,000 in August, and average hourly earnings climbed to 2.9%, handily beating the 2.7% that was forecast. This morning’s data reinforces the view of a robust American economy that is not suffering any ill effects from President Trump’s trade agenda.
EURUSD was already suffering from a softer Q2 GDP report, accelerated lower, falling from a pre-NFP level of 1.1615 to 1.1562. EURUSD is in a 1.1550-1.1650 trading range. A top-side break would extend gains to 1.1750 while a move below 1.1550 targets 1.1470. EURUSD traders will be looking ahead to next week’s European Central Bank meeting, although expectations are rather low.
The upcoming week will be hectic for GBPUSD traders. The Bank of England policy meeting is Thursday which may be anticlimactic. The EU/UK Brexit negotiations are in full-swing which suggest the BoE will not only leave rates unchanged but issue a tame statement as well. Arguably, Monday’s and Tuesday’s UK economic data barrage will be a more significant driver of sterling moves than the BoE meeting.
The Canadian employment report was released today as well. It was expected to be weak, but the data surpassed expectations. Canada lost 51,600 jobs in August, almost entirely erasing July’s 54,000 gain. USDCAD rallied to 1.3280 from 1.3115 but has since settled down in the 1.3150 range. The trade talks, not data is the main focus. USDCAD was undermined to a degree by Bank of Canada Deputy Governor Carolyn Wilkin’s comments yesterday afternoon. She said the Bank discussed dropping the reference about its “gradual approach to raising interest rates.” To some, it implies that without the risk of a collapse in US/Canada trade talks, the Bank would increase the pace of rate hikes.
Wall Street was not enamoured by the US employment report. The prospect of higher rates sooner than expected, combined with weak European bourses drove the major equity indices lower at the open. Tesla (TSLA: Nasdaq) isn’t helping. The company’s chief accounting officer resigned this morning, and the news took 9% off the value of its shares.