Dollar ends mixed after soft U.S. jobs report

Market Review - 07/09/2019  02:24GMT  

Dollar ends mixed after soft U.S. jobs report

The greenback pared recent gain and fell broadly against majority of its peers on Friday as the release of soft U.S. jobs report increased speculation of a rate cut from the Federal Reserve at its monetary policy meeting next week, price later pared intra-day losses and ended mixed. Market showed muted reaction to Fed chair J. Powell's speech.  
  
Reuters reported U.S. job growth slowed more than expected in August, with retail hiring declining for a seventh straight month, but strong wage gains should support consumer spending and keep the economy expanding moderately amid rising threats from trade tensions.    
Nonfarm payrolls increased by 130,000 jobs last month, the government said. The economy created 20,000 fewer jobs in June and July than previously reported. Economists polled by Reuters had forecast payrolls rising by 158,000 jobs in August.  The government has also trimmed economic growth for the second quarter. The employment report showed average hourly earnings gained 0.4% last month, the largest increase since February, after rising 0.3% in July. But the annual increase in wages dipped to 3.2% from 3.3% in July as last year's surge dropped out of the calculation. Strong consumer spending is supporting the economy.  
  
Reuters reported the U.S. Federal Reserve will continue to act "as appropriate" to sustain the economic expansion in the world's biggest economy, Fed Chair Jerome Powell said Friday in Zurich, sticking to a phrase that financial markets have read as signaling further interest-rate reductions ahead.  "Our obligation is to use our tools to support the economy, and that's what we'll continue to do," Powell said at the University of Zurich.    
Still, he said, "We are clearly at a time where there is a range of views" among Fed policymakers meeting Sept. 17-18 to decide on rates.  
  
Powell's careful wording reflects a split within the U.S. central bank about how best to respond to an economy where the job market and consumer spending are strong but rising trade tensions between Beijing and Washington, Britain's possibly messy exit from the European Union, and a broad global slowdown pose risks.  Powell said policymakers will be closely watching geopolitical risks, financial conditions, and other incoming economic data as they weigh what to do.  
  
Versus the Japanese yen, although the greenback edged up to 107.09 in Asian morning, price erased its gains and dropped at New York open on soft U.S. jobs report to session lows at 106.63 in New York morning on usd's weakness before recovering to 106.93 at the close.  
  
Although the single currency traded with a firm bias in Asia and gained to 1.1051 in early European morning, price reterated to at 1.1021 ahead of NY open. Euro then rallied to session highs at 1.1056 on usd's broad-based weakness after release of soft U.S. payrolls before erasing intra-day gain, price last traded at 1.1027 at the close.  
  
The British pound traded sideways in Asia before edging up to 1.2343 at European open, however, renewed selling there knocked price down to 1.2286 in European morning. Cable then rebounded briefly to 1.2328 in Europe on news that a London High court rejected an appeal to PM Johnson's suspension of Parliament before retreating again to 1.2290. The pair rose to session highs 1.2338 in post-NFP New York morning on usd's weakness but only to ratchet lower to session lows at 1.2280.  
  
Reuters reported London's High Court on Friday rejected a legal challenge against British Prime Minister Boris Johnson's suspension of parliament before Brexit, but said it could be taken to the Supreme Court for an appeal, the BBC said.  Johnson announced at the end of August that he would suspend parliament from mid-September to mid-October, just before Britain is due to leave the European Union on Oct. 31, so the government could announce a new legislative programme.  That prompted campaigner Gina Miller, who defeated the government over another Brexit issue two years ago, to challenge the order.  
  
In other news, Reuters then reported the British parliament's upper chamber on Friday approved a bill which aims to block a no-deal Brexit at the end of October by forcing Prime Minister Boris Johnson to seek a delay to Britain's European Union departure.  The legislation, which requires Johnson to ask for a three-month extension to Britain's EU membership if parliament has not approved either a deal or consented to leaving without agreement by Oct. 19, is expected to be signed into law by Queen Elizabeth on Monday.  The House of Lords approved the bill without a formal vote at its final stage.  
  
Data to be released this week :  
  
New Zealand manufacturing sales, Japan current account, GDP revised, GDP deflator, Eco watchers current, Eco watchers outlook, China exports, imports, trade balance, Swiss unemployment rate, Germany exports, imports, trade balance, current account, UK GDP, NIESR GDP estimate, industrial output, manufacturing output, construction output, good trade balance, good trade balance non-EU and EU sentix index on Monday.  
  
China PPI, CPI, Australia NAB business condition, NAB business confidence, France non-farm payrolls, industrial output, Italy industrial output, industrial orders, UK claimant count, ILO unemployment rate, employment change, average weekly earnings, Canada house starts, building permits and U.S. redbook, JOLTS job opening on Tuesday.  
  
Japan business servey index, U.S. MBA mortgage application, PPI final, PPI core, wholesale inventories, wholesale sales and Canada capital utillization on Wednesday.  
  
New Zealand food price index, UK RICS housing price balance, Japan core goods price, machinery orders, Germany CPI final, HICP CPI final, Swiss producer prices, France CPI EU norm final, CPI, EU industrial production, ECB deposit rate decision, ECB interest rate decision, U.S. core CPI, CPI, real weekly earning, initial jobless claims, Federal budget and Canada new housing price index on Thursday.  
  
New Zealand manufacturing PMI, Japan industrial output, EU labour costs, trade balance and U.S. import prices, export prices, retail sales, retail sales ex-autos, business inventories, U Michigan sentiment prelim on Friday.