Strong employment data from the US boosts market sentiments as DOW future is up over 400 pts at the time of writing. European indices are also extending gains. The greenback however, shrugs of the data and it’s trading as the second weakest for today, next to Yen. New Zealand Dollar is currently the strongest, followed by Sterling. Risk-on mode is somewhat pressuring Gold and lifting oil prices.

Technically, Gold is back below 1760 after hitting as high as 1789 earlier this week. While some consolidations could be seen, outlook will stays bullish as long as 1747.37 support holds. Sterling pairs will remain something to pay attention, in particular 1.2542 resistance in GBP/USD and 0.9001 support in EUR/GBP. Break of these levels will indicate sustainable buying in the Pound.

In Europe, currently, FTSE is up 1.21%. DAX is up 2.37%. CAC is up 2.17%. German 10-year yield is down -0.005 at -0.398. Earlier in Asia, Nikkei rose 0.11%. Hong Kong HSI rose 2.85%. China Shanghai SSE rose 2.13%. Singapore Strait Times rose 1.02%. Japan 10-year JGB yield dropped -0.0142 to 0.037.

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US NFP grew 4.8m, unemployment rate dropped to 11.1%

US non-farm payroll employment grew 4800k in June, well above expectation of 3000k. But it’s still -14.7m, or -0.6%, below the February level. May’s figure was revised up to 2699k. Unemployment rate dropped back to 11.1%, down from 13.3%, better than expectation of 12.2%. Labor force participation rate also rose 0.7% to 61.5%, even though it’s still -1.9% below February’s level. Average hourly earnings dropped -1.2% mom, worse than expectation of -0.6% mom.

Initial jobless claims dropped to 1427k, continuing claims down to 19.3m

US initial jobless claims dropped -55k to 1427k in the week ending June 27, above expectation of 1350K. Four-week moving average of initial claims dropped -117.5k to 1504k. Continuing claims rose 59k to 19290k in the week ending June 20. Four-week moving average of continuing claims dropped -494.5k to 19854k.

Also released, US trade deficit widened to USD -54.6B in May versus expectation of USD -52.5B. Canada trade deficit narrowed to CAD -0.68B.

Eurozone unemployment rate rose to 7.4%, better than expectations

Eurozone unemployment rate rose 0.1% to 7.4% in May, better than expectation of 7.7%. EU unemployment rate also rose 0.1% to 6.7%. 12.146m people were unemployed in Eurozone, 14.366m in EU.

Eurozone PPI came in at -0.6% mom, -5.0% yoy, in May. EU PPI was at -0.5% mom, -4.6% yoy.

Swiss CPI came in at 0.0% mom, -1.3% yoy in June.

Australia trade surplus widened to AUD 8.03B as imports and exports plunged

Australia exports of goods and services dropped -4% mom, or AUD -1604m, to AUD 35.74B in May. Imports dropped -6% mom, or AUD -ADU 1799m, to AUD 27.71B. Trade surplus rose 2% mom to AUD 8.03B, below expectation of AUD 9.0B.

The trade surplus is seen as remaining elevated and has some how been lifted by the impacts of the coronavirus pandemic. Though, the down trend in both imports and exports showed sluggish domestic and external demands.

USD/JPY Mid-Day Outlook

Daily Pivots: (S1) 107.16; (P) 107.66; (R1) 107.96; More...

USD/JPY recovers mildly after drawing support from 4 hour 55 EMA, but stays below 108.16 temporary low. Intraday bias remains neutral first. Further rise will remain in favor as long as 106.79 support holds. Above 108.16 will target 109.85 resistance first. Break will argue that larger rebound from 101.18 might be resuming to 112.22 key resistance. On the downside, below 106.79 minor support will dampen the bullish case and turn bias back to the downside for 106.07 instead.

In the bigger picture, USD/JPY is still staying in long term falling channel that started back in 118.65 (Dec2016). Hence, there is no clear indication of trend reversal yet. The down trend could still extend through 101.18 low. However, sustained break of 112.22 should confirm completion of the down trend and turn outlook bullish for 118.65 and above.

Economic Indicators Update

GMT Ccy Events Actual Forecast Previous Revised
23:50 JPY Monetary Base Y/Y Jun 6.00% 3.90%
01:30 AUD Trade Balance (AUD) May 8.03B 9.00B 8.80B 7.83B
06:30 CHF CPI M/M Jun 0.00% 0.10% 0.00%
06:30 CHF CPI Y/Y Jun -1.30% -1.20% -1.30%
09:00 EUR Eurozone Unemployment Rate May 7.40% 7.70% 7.30%
09:00 EUR PPI M/M May -0.60% -0.40% -2.00%
09:00 EUR PPI Y/Y May -5.00% -4.80% -4.50%
12:30 USD Initial Jobless Claims (Jun 26) 1427K 1350K 1480K 1482K
12:30 USD Nonfarm Payrolls Jun 4800K 3000K 2509K 2699K
12:30 USD Unemployment Rate Jun 11.10% 12.20% 13.30%
12:30 USD Average Hourly Earnings M/M Jun -1.20% -0.60% -1.00%
12:30 USD Trade Balance (USD) May -54.6B -52.5B -49.4B -49.8B
12:30 CAD International Merchandise Trade (CAD) May -0.68B -3.3B -4.3 B
13:30 CAD Manufacturing PMI Jun 40.6
14:00 USD Factory Orders M/M May 8.50% -13.00%
14:30 USD Natural Gas Storage 120B

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