On Monday, the greenback rose broadly after strong US jobs growth in June intimated that the Federal Reserve will not aggressively cut interest rates later this month. With a strong NFP report, the US dollar market finished on a positive note. The index surged against a basket of currencies to its highest levels in two and a half weeks on Friday.
The US Non-farm payrolls progressed by 224K jobs last month, which is the highest figure in five months. However, the unemployment data came out at 3.7%, missing the forecast of 3.6%. As discussed in the weekly outlook, the NFP places short term impact on the dollar, while the Unemployment rate leaves a longer-term impact. So, the dollar is likely to trade bearish today on Monday and onward until we have a positive economic data release from the US.
Looking ahead, the fundamental side is a bit weaker today, however, traders will be pricing in the weaker dollar sentiment on positive NFP sentiment & negative unemployment rate.
Watchlist – Key Economic Events Today
EUR – German Trade Balance
At 6:00 GMT, Destatis is due to release the trade balance figures for Germany. It’s a difference in value between imported and exported goods during the reported month. Export demand and currency demand are directly linked because foreigners must buy domestic currency to pay for the nation’s exports.
Germany is one of the leading business hubs in the Eurozone and contributes significantly to the economic growth of Eurozone. This is why traders look forward to a jump in the German exports. Economists are expecting a trade surplus of 16.8 billion vs. 16.9 billion in June.
EUR – Sentix Investor Confidence
It’s a leading indicator of economic health – investors and analysts are highly informed by virtue of their job, and changes in their sentiment can be an early signal of future economic activity.
Typically about 2,800 investors and analysts are asked to rate the relative 6-month economic outlook for the Eurozone. Today, economists are expecting a slight surge in investor confidence level to 0.3 vs. -3.3 previously. It may extend support to European pairs today.
USD – Consumer Credit m/m
The consumer credit reports a change in the total value of outstanding consumer credit that requires installment payments. At 19:00 GMT, the Federal Reserve will be releasing it with a negative forecast of 15.2B vs. 17.5B in May.
It’s correlated with consumer spending and confidence – rising debt levels are a sign that lenders feel comfortable issuing loans, and that consumers are confident in their financial position and eager to spend money.
JPY – Average Cash Earnings y/y
At 23:30 GMT, the Ministry of Health, Labour and Welfare will be reporting a change in the total value of employment income collected by workers.
Well, income is correlated with spending. The higher the disposable income consumers have, the more likely they are to increase spending. Economists’ forecast suggest further dips in average cash earnings by -0.6% vs. -0.1% last month.
Overall the market will be all about trading the weaker dollar sentiment on positive NFP sentiment & negative unemployment rate. So good luck and stay tuned for more updates!