Home Daily Commentaries US jobs data beats expectations

US jobs data beats expectations

Daily Currency Update

US jobs data held the headlines yesterday with the release of ADP non-farm employment change, unemployment claims and JOLTS job openings. The three reports showed a robust US labour market which seems to be coming into better balance and giving guidance on what’s happening beneath the surface of the economy. The ADP figure was the standout release, showing the number of vacant job openings fell by 496,000 in May and showing a cooling in demand for workers. Alongside these releases was US services PMI which also beat expectations, expanding greater than forecast. The sector has grown 36 of the last 37 months, registering 53.9 percent. GBP/USD was volatile ahead of the release, jumping from 1.2690 early morning to 1.2780. A sharp decline was seen on the news back down to 1.2680 but the currency pair has since recovered, trading just under 1.2750. EUR/USD also saw the same volatility but at a narrower range, moving between 1.0830 and 1.0890. The currency pair trade at the higher end of this range this morning.

Eyes will remain on the US today with further jobs data to be reported on. The pick of the three releases will be non-farm employment change, especially after the numbers posted yesterday – 224k forecast versus a previous 339k. Only a huge miss will derail the Fed’s plan to hike interest rate in July. Also today, ECB president Lagarde speaks where trader will scrutinise her Economic Meetings of Aix-En-Provence, in France. Any indicators given on future rate hikes will likely sway the EUR. USD and EUR volatility likely today as we head into the weekend.

Key Movers

German industrial production fell 0.2% on the month in May, indicating that the country's industrial sector, continues to struggle despite a small increase the prior month. The eurozone’s largest economy seems to be struggling to shake off the recession seen earlier in the year, exacerbated by weak global demand from China weighing on the country’s manufacturing sector. Despite this, the European central bank has indicated another increase in interest rates later this month is very likely to tackle its own ongoing inflationary concerns. GBP/EUR has touched 1.1730 in the past 24 hours and EUR/USD has been as low as 1.0830 which was last seen in the middle of June.

Expected Ranges

  • GBP/USD: 1.2690 - 1.2790 ▲
  • GBP/EUR: 1.1680 - 1.1740 ▲
  • GBP/AUD: 1.9050 - 1.9280 ▲
  • EUR/USD: 1.0840 - 1.0920 ▲