GBP/USD - Pound Pressured by Political Turmoil and Better US Jobs Data
We begin today's broadcast with the Dollar-Pound pair which fell for a third straight day as Gordon Brown attempted to salvage the political upheaval in his government by reshuffling his Cabinet following the resignation of two more ministers. The Pound has seen a steep 700 slide since the pair hit a line of long term resistance at the 1.6650 level on Wednesday. Today, the pair fell below the 1.60 level, reaching 1.5940 in late NY trading. That puts it below where it started the week. There was a strong spike upward following the release of the US nonfarm payroll report, but those gains by the Pound were short lived, and today's overall fall amounted to about 240 pips.
EUR/GBP - Pound Reverses Some of its Losses vs Euro
The Euro-Pound pair, after climbing in the Asian session to the 0.8865 level fell back down in favor of the Pound the rest of the session. The Pound reclaimed the 0.8740 level after two straight sessions of Euro gains on the back of the political turmoil in the UK.
US Job Losses in May Much Smaller Than Expected
In the US, the nonfarm payroll report showed that the US economy shed 345K jobs in May, a figure that came in much better than the expected 520K decline forecast by economists. It's the smallest amount of job losses in 8 months, though the unemployment rate did still move higher to 9.4%, a large jump from April. The smaller job loss figure is a welcome sign as it can imply that the recession in the US is easing and the strain on to the labor market is receding as well. Figures for April were revised to show a smaller amount of job losses as well. The jump in the unemployment rate, which is the now at its highest since 1982, has to do with more people joining the labor force.
EUR/USD - Euro Slides Sharply as Non-farm Payroll Report Supports Greenback
The better than expected nonfarm release caused some strong moves in currency markets. The correlation recently between better US news boosting risk appetite had been weakening the Dollar as it lost its safe haven appeal. Today however, the better report supported the greenback as it implied that the US economy may be coming out of its recession sooner than the other major economies. At first the Euro rose to the 1.4260 level, but that move upwards proved to be a clear out action before the Euro slid 300 pips from that high. The pair fell all the way to the 1.3930 level, after pausing near the 1.40 level.
USD/JPY - Dollar Jumps vs Yen on Better Jobs Data
The Dollar-Yen pair shot up 200 pips following the nonfarm payroll release, breaking past last week's high. The rally stalled near the 97.80 level as that represented a longer term trendline of resistance, but in later NY trading the pair rose above that, reaching the 98.50 area to set its high for the day. We documented how the pair broke out of its consolidation pattern from earlier in the week, and following today's breakout, the pair may be poised to rally further next week with the next level of resistance at the 99.50 level.
CAN Economy Sheds More Jobs Than Expected
In Canada, the economy shed 41.8K jobs, more than expected and the unemployment rate increased to 8.4%. May's losses follow a month were jobs rose. In addition to manufacturing losses in May, transportation and warehousing also declined. Public administration was the only industry with a notable employment increase.
USD/CAD - Greenback Reasserts Strength Following Yesterday's Retracement
The US Dollar-Canadian Dollar pair, which has seen a rather volatile week, rose today to the 1.12 level. The greenback pared its losses from yesterday, as the Loonie was pressured by its jobs data and the US was boosted by its nonfarm payroll report. This pair formed a double bottom earlier in the week, and yesterday's price action tested Tuesday's resistance which has now turned to support. That validated the previous upmove and now the pair is testing its support from last week. The greenback gained against the other commodity currencies, the Aussie and Kiwi, as well, though they rose against the Yen.
Next Week's Releases
Next week will be lighter in terms of important releases following this week, but there are still some important fundamentals to keep your eye on. Australia will post data on home loans and employment, the US will release reports on its trade balance and retail sales, the UK posts data on manufacturing production, and New Zealand will conclude its interest rate statement.
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