NFP Plunge
The US Dollar is attempting to stabilise today following a sharp drop lower on Friday in response to a heavily weaker-than-forecast US jobs report. The headline NFP data set came in at just 76k for July, below the 106k the market was looking for. Alongside the headline miss, there were heavy downward revisions to the two prior monthly readings with the June NFP revised down to just 14k from 147k initially. Indeed, the downward revisions (which were unusually large) resulted in Trump firing the head of the Bureau of Statistics who he claimed had manipulated the data for political reasons.
Fed Easing Expectations
Resilience in the US jobs market had been a key argument for keeping US rates at higher levels. With the jobs market now seen in a far weaker position than initially thought, Fed rate cut expectations have rocketed. The market is now pricing in a roughly 80% chance of a .25% cut next month, up sharply from before Friday’s data shock. Indeed, with the unemployment rate seen moving higher to 4.1% from 4.1%, a cut next month looks likely unless we see an upside surprise in inflation data ahead of the September meeting. With this in mind, USD has room to fall further in coming weeks, particularly given the fresh uncertainty around the uptick in the US trade war following tariff increases last week.
Technical Views
DXY
The rally in the index has stalled for now into the 100 level with price reversing sharply low, now back beneath the 99.15 level. With momentum studies dropping sharply, there is room for a further decline. However, while price holds above the 98.03 level, the bullish channel break remains valid with 101.91 the higher target for bulls.
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With 10 years of experience as a private trader and professional market analyst under his belt, James has carved out an impressive industry reputation. Able to both dissect and explain the key fundamental developments in the market, he communicates their importance and relevance in a succinct and straight forward manner.