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US Job Number Diminishes Interest Rate Cut Expectations from the Federal Reserve

USD - United States Dollar

Expectations of an interest rate cut in the U.S. later this month were diminished last week by a surprisingly strong job report that showed the U.S. economy added 224k jobs in June (versus +160k expected). May saw a figure of only 72k jobs added, which had led to the cemented view that there would be a July rate cut from the Fed. Last Friday’s numbers have added doubt to that view and futures markets now show that traders see a 70 percent chance of a rate cut in July, down from 90 percent.
The Euro is clinging onto its recent upward trend amid a fresh attack from U.S President Trump, who accused Europe (and China) of playing a “big currency manipulation game” in a Twitter post. European Central Bank Governing Councilmember Francois Villeroy de Galhau rejected the accusations, and said that the ECB’s role is to maintain price stability and not to set foreign-exchange levels. Trump has made it very clear that he wants a weaker dollar to help boost domestic exports. He's pushing the Federal Reserve to help make that happen, despite Central Bank Chairman Jerome Powell made it clear that it’s not his job.

Key Movers

The head of the Bank of England Mark Carney delivered a blow to the world’s major economies last week. He stated global trade tensions have led to a ‘sea change’ in investors outlook for the world economy. The shift in market expectations of interest rates worldwide, particularly in the U.S., where up to four rate cuts are conceivable by the end of 2020, “suggests a shock to the U.S. and Chinese business confidence and investment analogous to what has happened in the U.K..” His comments also led to investors increasing bets on a BoE rate cut later this year.
After weeks of negotiations, European leaders have announced their picks for the new top table of the E.U, and for the first time, the two most prestigious positions will be lead by women. Christine Lagarde is set to take over from Mario Draghi as the Head of the ECB while German defense minister, Ursula von der Leyen, has been forward to lead the European Commission.

Expected Ranges

EUR/USD: 1.1212 - 1.1234 ▼

GBP/CAD: 1.2500 - 1.2540 ▼

USD/CAD: 1.3048 - 1.3083 ▼

AUD/USD: 0.6974 - 0.6994 ▲

NZD/USD: 0.6622 - 0.6653 ▲

EUR/GBP: 0.8954 - 0.8973 ▲