Mid-Day Report: Dollar Soars on Strong NFP, ECB on Hold

Dollar was given a boost by strong employment data and extends this week’s rebound in early US session. The non-farm payroll report showed 288k growth in June comparing to expectation of 210k. That’s the second best reading since January 2012 and compares to April’s 304k. Prior months’s figure was revised up from 217k to 224k. The total number for Q2 was an impressive 816k. Unemployment dropped to 6.1% comparing to expectation of 6.3%. That’s the lowest number in nearly six years. Risk markets also response positively to the data with stock futures pointing to higher open. DOW and SP 500 might continue the record run ahead of tomorrow’s Independence Day holiday.

Also released from US, initial jobless claims rose slightly to 315k in the week ended June 28, comparing to expectation of 310k. Continuing claims rose to 2.579m in the week ended June 20. US trade deficit narrowed to USD -44.4b in May. Canada trade deficit narrowed to CAD -0.2b in May. ECB the benchmark interest rates unchanged at 0.15% as widely expected. Released from Eurozone, retail sales was flat mom in May, services PMI was unrevised at 52.8 in June, Italian services PMI improved to 53.9 in June. Released from UK, services PMI missed expectation and dropped to 57.7 in June.

Australia retail sales dropped -0.5% mom in May versus expectation of 0.3% mom. Building approvals rose 9.9% mom in May versus expectation of 3.5% mom. Aussie was hammered down by RBA governor Steven’s comments. Stevens said that Aussie’s exchange rate is “overvalued” and is set to fall significantly, “not by just a few cents”. He noted that “when judged against current and likely future trends in the terms of trade, and Australia‚Äôs still high costs of production relative to those elsewhere in the world, most measurements would say it is overvalued, and not by just a few cents.”

Daily Pivots: (S1) 101.50; (P) 101.67; (R1) 101.93; More…

USD/JPY’s rebound from 101.23 accelerates today and reaches as high as 102.24 so far. The pull back from 102.79 is completed at 101.23 already and rebound form 100.82 might be resuming. Intraday bias remains on the upside for 102.79 first. Break will target 100% projection of 100.82 to 102.79 from 101.23 at 103.20. But after all, price actions from 100.75 are viewed as a sideway consolidation pattern. We’d expect strong resistance below 104.12 and bring reversal. Below 101.74 minor support will turn bias back to the downside instead. Overall, an eventual downside breakout is expected.

In the bigger picture, medium term up trend from 75.56 is in form of a five way impulsive move with rise from 96.56 as the fifth leg. There is no confirmation of reversal yet but a medium term top should be near, if not formed. Decisive break of 100.61 support will argue that USD/JPY has already topped out in medium term at 105.41 and should bring deeper fall back to 38.2% retracement o 75.56 to 105.41 at 94.00. In case of another rise, we’ll focus on reversal as it approaches 50% retracement of 147.68 to 75.56 at 111.62.

GMT
Ccy
Events
Actual
Consensus
Previous
Revised
01:30
AUD
Retail Sales M/M May
-0.50%
0.30%
0.20%
-0.10%
01:30
AUD
Building Approvals M/M May
9.90%
3.50%
-5.60%
-5.80%
07:45
EUR
Italian Services PMI Jun
53.9
52.3
51.6

08:00
EUR
Eurozone Services PMI Jun F
52.8
52.8
52.8

08:30
GBP
Services PMI Jun
57.7
58.1
58.6

09:00
EUR
Eurozone Retail Sales M/M May
0.00%
0.30%
0.40%
-0.20%
11:45
EUR
ECB Rate Decision
0.15%
0.15%
0.15%

12:30
EUR
ECB Press Conference

12:30
CAD
Trade Balance (CAD) May
-0.2B
-0.3B
-0.64B

12:30
USD
Trade Balance May
-44.4B
-45.1B
-$47.2B
-47.04B
12:30
USD
Change in Non-farm Payrolls Jun
288K
210K
217K
224K
12:30
USD
Unemployment Rate Jun
6.10%
6.30%
6.30%

12:30
USD
Initial Jobless Claims (JUN 28)
315K
310K
312K
313K
14:00
USD
ISM Non-Manufacutring Composite Jun
56
56.2
56.3

14:30
USD
Natural Gas Storage
100B
100B
110B

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