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Jobs growth rebounds strongly

USD

Friday's US employment report showed nonfarm payrolls rising 224k in June. Including revisions to earlier months there were 53k more people in work that analysts had forecast. The strong jobs number has led some to speculate that the Federal Open Market Committee might think twice about lowering interest rates when it meets at the end of this month. However, June's overshoot no more than cancels out the unexpectedly low number in May. This year's average 172k monthly increase is well short of last year's 221k.

Meanwhile there is further talk of the president's wish to unseat Fed chairman Jerome Powell. It is possible that Trump has been inspired by Turkey's president Erdo─čan, who at the weekend fired his central bank governor and replaced him with someone more likely to follow instructions and take interest rates lower.

EUR

The weekend's general election in Greece replaced Alexis Tsipras and the faux-radical Syriza with Kyriakos Mitsotakis and New Democracy, a conventional centre-right party. There was no immediate knock-on benefit for the euro but the result does dial down the Club-Med risk to the single currency. If anything, it is stodgy old Northern Europe that is posing the economic problems at the moment. Germany did little to mitigate that headache this morning with its trade and output data. The trade figures were respectable enough, with exports up and imports down in May. Output did not look great though, down by an annual 3.7%.

The EUR is 0.3% lower against the USD. Its decline is entirely the result of the USD's climb following the employment report.

CAD

There was a sharp contrast between the US employment data and the numbers from Canada. It was always to be expected that jobs growth for Canada in June would look modest in comparison with the 27.7k payrolls increase in May; analysts predicted a rise of just 10k. In this event, the number was negative, with a net loss of 2.2k jobs.  

The Loonie dropped sharply, at one point down by three quarters of a cent against the USD. It did not stay down though. As can often be the case, the good US numbers helped the CAD regain its composure. It also received some help from a 2% rise in oil prices which, itself, was also inspired by the US data. Overall, the CAD is unchanged on the day.

GBP

The GBP also lost ground to the USD in the wake of the US employment report. It made something of a recovery later, but not to the extent of the CAD. On the day sterling is 0.2% lower against the USD.

In Westminster efforts have begun to prevent the new prime minister suspending parliament in order to ram through a no-deal Brexit on October 31. Opponents will seek to amend legislation today or tomorrow such that parliament will be forced to sit in October. Separately, the one-time head of the Brexit department in Whitehall has warned that a no-deal Brexit would be "fraught with risk".

JPY

Overnight data from Japan were few. Bank lending grew by 2.3% in the year to June, slightly less than the predicted 2.8%. A current account surplus of ¥1.6 trillion in May was a little larger than expected. Machinery orders fell 7.8% in May and were 3.7% lower on the year.

None of the numbers had any obvious impact on the JPY. It is 0.3% lower against the USD.

USD: Payrolls jump 224k in June

USD: Payrolls jump 224k in June

EUR: Traditional government returns to Greece

EUR: Traditional government returns to Greece

CAD: Jobs undershoot, falling in June

CAD: Jobs undershoot, falling in June

GBP: No-deal Brexit "fraught with risk"

GBP: No-deal Brexit "fraught with risk"

JPY: Machinery orders fall again

JPY: Machinery orders fall again

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