Dollar Gains on Jobs Report

The dollar strengthened on the back of a solid jobs report. Euro-dollar fell below 1.1800 and sterling-dollar below 1.3100. The US added 209K jobs to the economy in July, above forecasts, and the Unemployment Rate fell to 4.3% as the participation rate rose. Average Hourly Earnings rose 0.3%, in line with expectations.

Previous Day's Market Highlights

The dollar strengthened on the back of a solid jobs report. Euro-dollar fell below 1.1800 and sterling-dollar below 1.3100. The US added 209K jobs to the economy in July, above forecasts, and the Unemployment Rate fell to 4.3% as the participation rate rose. Average Hourly Earnings rose 0.3%, in line with expectations.

The report is strong enough to keep the Fed on track to raise interest rates, although slower inflation remains a point of concern. The probability of a December rate hike according to the CME FedWatch Tool rose from around 44% prior to the report to 50% following the report.

Markets are currently pricing in a greater than 90% chance that the Fed will keep rates on hold when it meets in September and November.
 
Canadian data were mixed as employment data surprised to the upside and trade data disappointed. The Canadian dollar traded in both directions against the pound, ultimately gaining over the course of the afternoon to below 1.6500.  

Currency Pairing 08:00 Today Vs 08:00 Yesterday Four-Week High Four-Week Low % Change
GBP / EUR 1.1070 1.1438 1.1044 3.44%
GBP / USD 1.3045 1.3272 1.2812 3.47%
EUR / USD 1.1785 1.1912 1.1370 4.55%
GBP/AUD 1.6465 1.6984 1.6269 4.21%
GBP / NZD 1.7671 1.7994 1.7398 3.31%
GBP / CAD 1.6519 1.6727 1.6237 2.92%

Today's Market Highlights

The calendar gets off to a fairly quiet start today. Sentix Investor Confidence in the Eurozone is forecast to dip, which may have a muted impact or weigh slightly on the euro.
 
In the afternoon, markets will keep an eye on the US Labor Market Conditions Index(15:00 BST) ahead of speeches from Fed members Bullard and Kashkari (16:45, 18:25 BST). Bullard is a non-voter this year. Kashkari tends to be one of the more dovish members and is speaking at the Rotary Club of Downtown Sioux Falls.  
 
Highlights this week include UK Manufacturing and Industrial Production data, US CPI, and New Zealand’s latest interest rate decision. US CPI data will be in sharp focus following Friday’s strong jobs report as markets speculate on the odds of a third rate hike later this year. 

Today's Economic Calendar

Time Currency Release Consensus Previous
09:30 EUR Sentix Investor Confidence (Aug) 27.8 28.3
15:00 USD Labor Market Conditions Index (Jul) 1.5
16:45 USD Fed Member Bullard Speaks
18:25 USD Fed Member Kashkari Speaks
20:00 USD Consumer Credit Change (Jun) $15.84B $18.41B
02:30 AUD NAB Business Confidence (Jul) 9
03:00 CNY Trade Balance CNY (Jul) 292.0B 294.3B