EURUSD and USDJPY, H1
The dollar traded slightly lower following the data, where non farm payrolls were lower than expected, though the previous month was revised higher, and the unemployment rate fell to 3.9%. The June trade deficit was in line with expectations. EURUSD rallied to 1.1610 from 1.1590, as USDJPY bottomed at 111.40 from 111.60. Equity futures have given back most of their modest gains, while yields were little changed.
US nonfarm payrolls increased 157k in July , a little disappointing, but prior months’ gains were revised higher with June now rising 248k and May up 268k. The unemployment rate ticked down to 3.9% from 4.0%. Earnings were up 0.3% after June’s 0.1% gain, and at a 2.70% y/y pace versus 2.74% y/y. The labor force edged up 105k after June’s 601k surge, with household employment up 389k versus 102k. Private payrolls increased 170k (ADP +219k), with goods producing jobs up 52k, and construction up 19k. Manufacturing jobs rose 37k, while services increased 118k. The government shed 13k workers. The labor force participation rate was steady at 62.9%. This is another very healthy job report.
Meanwhile, US trade deficit widened 7.3% to a -$46.3 bln in June after May’s 6.3% narrowing to -$43.2 bln. Exports declined 0.7% to $213.8 bln versus the prior 1.9% jump to $215.3 bln, while imports were up 0.6% to $260.2 bln following May’s 0.5% gain to $258.5 bln (revised from $258.4 bln). The “real” goods deficit widened to -$79.3 bln versus -$75.5 bln, with imports 0.8% higher and exports down 1.4%. The deficit with China was -$33.5 bln from -$33.2 bln, while Canada’s was -$2.04 bln from -$1.46 bln.
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