US dollar (USD) gets a jolt from JOLTS

The US Bureau of Labor Statistics’ Job Openings and Labor Turnover Survey is usually one of the month’s most easily overlooked ecostats. Not yesterday though: there was nothing else around and investors fastened onto it like limpets. It also happened to be a record high.

There were just over 10 million job vacancies in June, 590k more than a month earlier and a third more than the previous peak in early 2019. The statistic looks odd next to last week’s Employment Situation Summary, which showed 8.7 million people out of work. However, it seems that a lot of folk without jobs are less than eager to find one. Childcare needs, health concerns and enhanced unemployment benefits are among the reasons cited.

Whatever the precise details, investors saw the jobs vacant number as compelling evidence of a healthy US economy, with all that implies for tighter monetary policy. The USD strengthened by an average of 0.4% to take the lead for the day. It took a quarter of a cent each from the GBP and EUR.

Tapering thoughts support USD

As if confirmation were needed that the JOLTS report reinforces the case for tighter US monetary policy, two regional Federal Reserve presidents voiced a similar opinion on Monday. The Atlanta Fed’s Raphael Bostic and Richmond’s Tom Barkin both said that inflation has now reached its sustainable 2% target.

Mr Bostic stopped short of playing the gung-ho hawk when he spoke to reporters. He believes the US economy needs to be “well beyond the crisis” before consideration is given to higher interest rates. However, he is open to the idea of beginning to taper the quantitative easing programme in the fourth quarter, or even sooner if employment continues to boom. Mr Barkin told the Roanoke Chamber of Commerce that rates can rise “when inflation hits 2%, which I think you can argue it already has, and it looks like it is going to sustain there”.

Other than the JOLTS report and the two Fed bosses there was little to attract investors’ attention. Sentix’s survey of Eurozone institutional investors and analysts found “surprisingly little cheering, surprisingly few fears” as its confidence index slipped almost eight points to 22.2. The EUR was unmoved, and is flat on the day against the GBP.

More subjective data on today’s agenda

There are plenty of fluffy confidence measures but few real economic statistics on the list. Three of those hard ecostats are already out: NZ credit card sales in July were up by 4.7% from the same month last year; UK retail sales for the same month were up by 17%; Norwegian inflation is a touch higher at 3%.

The remaining solid ecostats cover Swedish industrial production, South African manufacturing output, and US nonfarm productivity and unit labour costs. None of those will have much impact.

As for the subjective reports, NAB started things off with its Monthly Business Survey, which was headlined “Confidence and conditions fall further with ongoing lockdowns”. The business confidence index was down by 19 points at -8. ZEW’s measures of German and Eurozone investor confidence come next and are followed, this afternoon, by NFID’s index of US small business confidence. There are figures tonight for Australian consumer confidence and new home sales.