Following the release of some encouraging US economic reports on Thursday, Friday will mark the release of the long-awaited Nonfarm Payrolls report. During the Asian session, Japan will publish data such as household spending, bank loans and the leading index. Later, Germany will publish industrial production data. Canada will also report on the labor market.
Here’s what you need to know on Friday, July 7:
The U.S. dollar It had mixed results, weakening against the Euro, Pound and Yen, and rising strongly against commodity currencies. The encouraging US data boosted expectations of a further interest rate hike by the Federal Reserve (Fed) and weighed on US stocks. Deteriorating market sentiment and falling commodity prices pushed AUD, CAD and NZD lower.
The Dow Jones lost 1.07% and the Nasdaq plunged 0.82% on Friday. The decline was accelerated by upbeat US data as market participants anticipate further monetary tightening ahead. Meanwhile, US Treasury Secretary Yellen is currently in China, and there’s a new social platform called Threads by Meta.
The Automatic Data Processing (ADP) report showed an increase in private payrolls of 497,000, surpassing the market consensus of 228,000. Initial claims for jobless benefits rose to 248,000, while continuing claims fell to 1.72 million, the lowest level since February. The ISM services PMI rose from 50.3 to 53.9 points in June, and the employment index improved to 54.4 points. On the downside, JOLTS Job Openings fell slightly below expectations in May, dropping from 10.3 million to 9.8 million.
Wells Fargo Analysts:
The services sector continues to benefit from robust demand, which is prompting many companies to increase their staff in a way that they have not done in recent months. Taking into account the increase in the employment component, we have raised our June payroll forecast to 260,000 from 245,000.
After the data was released, the yield on government bonds rose in both Europe and the United States. The 10-year Treasury yield rose to 4.06%, matching the year-to-date high, while the 2-year yield hit the highest intraday level since 2007 at 5.11%.
On Friday the official report on employment in the United States will be published. Market consensus expects the economy to have created 225,000 jobs in June; however, following the release of the latest data, market participants are contemplating the possibility of a positive surprise. The unemployment rate is expected to drop from 3.7% to 3.6%. Market participants will also be watching the revenue data. If the numbers confirm that the labor market remains tight, the likelihood of another Fed rate hike could consolidate. Equally important, however, will be next week’s US inflation data.
Data released on Thursday showed German factory orders rebounded more than expected to 6.4%, while euro zone (ZE) retail sales fell 2.3% in May. German data will be released on Friday with industrial production figures for May. During the European session, the intervention of De Guindos, from the European Central Bank, is scheduled. The pair EUR/USD it tested the 1.0830 area twice and bounced towards 1.0900. The euro benefited from rising Euro Zone yields.
GBP/USD posted its highest daily close in a week near 1.2750, despite negative US data and risk aversion. However, the EUR/GBP pair bounced from weekly lows to 0.8550.
The yen held up well and outperformed on Thursday, despite rising government bond yields. The currency was supported by the fall in equity markets. The USD/JPY pair fell but finished off the lows, consolidating slightly above 144.00. It was the worst day for the pair in a month. In Japan, household spending, bank loans and the leading economic index will be published on Friday.
The AUD/USD pair fell for the second day in a row, but found support at the 0.6600 area. The pair NZD/USD pulled back from weekly highs and was rejected again above 0.6200.
The CAD lagged on Thursday, with USD/CAD rising for the second day in a row and building a 150-point gain as it neared 1.3400. Canadian trade data surprised with the biggest swing on record, going from a C$890 million surplus in April to a C$4.3 billion deficit in May, versus expectations for a C$1.5 billion surplus. Employment in Canada will be reported on Friday. A positive net change in employment of 20,000 people is expected in June, and the unemployment rate is expected to rise slightly from 5.2% to 5.3%.
TD Securities Analysts:
We expect the labor market to recover with the creation of 25,000 jobs in June, after a decrease of 17,000 in the previous month. Services should boost hiring, while the decline in manufacturing employment weighs on the goods sector. Our forecast would leave the unemployment rate stable at 5.2%, although wages would slow sharply as base effects would offset another large increase (0.4%) MoM.
He USD/MXN rallied on Thursday, posting its best day in months. It rose from the lowest level in years below 17.00 to 17.38.
Metals fell on higher yields. Gold lost $10 but remained above $1,900, while Silver it lost 1.75%, falling to as low as $22.50, erasing the weekly gains. Cryptocurrencies weakened after the publication of negative data in the US. Bitcoin it fell 0.65% to $30,260, and Ethereum was down as low as $1,880.
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Source: Fx Street
I am Joshua Winder, a senior-level journalist and editor at World Stock Market. I specialize in covering news related to the stock market and economic trends. With more than 8 years of experience in this field, I have become an expert in financial reporting.
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