Details better than headline
On the headline, the June employment report for June didn’t look too impressive, with a mere net 500 jobs added in the month. However, drilling down into the details showed that 21,100 full-time jobs made up the total with a loss of 20,600 part-time ones. The rest of the numbers held no surprises, with the unemployment rate steady at5.2% with an unchanged participation rate at 66%.
The initial reaction in the currency markets was slow, but once the full-time category figures were known, AUD/USD jumped up to an intra-day high of 0.7027 and then subsequently extended the climb to 0.7030. The FX pair has climbed above the 55-hour moving average for the first time in two days and likely has eyes on the Fibonacci retracement level at 0.7034 on the hourly charts.
AUD/USD Hourly Chart
Bank of Korea joins the doves
In an unexpected move, the Bank of Korea trimmed its seven-day repo rate by 25bps to 1.50% at its policy meeting today. The decision was not unanimous among the board members, with one members preferring to keep rates unchanged. The majority of analysts polled had expected the Bank to remain on hold, preferring to wait until the Fed had made its move.
At the same time, the Bank cut its 2019 GDP growth forecast to 2.2% from 2.5%, mostly due to slower exports, and provided initial guidance for 2020 at 2.5% to 2.6%. The inflation forecast was cut to 0.7% for this year from 1.1% and is seen gradually rising during 2020 to the mid-1% levels.
UK retail sales on tap
Retail sales in the UK are expected to fall 0.3% m/m in June, according to the latest survey of economists, a slight improvement from May’s 0.5% decline. The US data slate has only second-tier data with the Philadelphia Fed manufacturing survey seen rebounding to 5.0 in July after a disappointing 0.3 reading in June. We also have speeches from Fed’s Bostic and Williams, a dove and a hawk respectively, who are unlikely to contradict the Fed’s current guidance of a rate cut this month.