Forex news for North American trading on August 6, 2021
- Covid - 19 vaccine booster might just be one time shot, not a yearly one
- S&P and Dow close at record highs. NASDAQ lags after strong jobs report.
- US consumer credit for June $37.69B vs est. $23.0B
- What key releases and events will be released next week?
- Earnings next week highlighted by Disney, Coinbase, AMC, EBay
- WTI crude oil futures settle at $68.28
- Baker Hughes oil rig count rises to 387 from 385 last week
- Fed's Kaplan: Calls for gradual and balanced tapering starting soon
- European major indices end the week on a positive note. France's CAC trades at the highest level since 2000
- Pres. Biden: New Delta wave of Covid 19 will be very different to deal w/ given vaccinations
- NY Fed Nowcast moves to 3.7% from 4.2% last week
- Goldman Sachs raises chance for a formal taper announcement in November
- Canada Ivey PMI (SA) for July 56.4 versus estimate of 67.3
- US wholesale inventories +1.1% versus 0.8% estimate
- US Sec. of Labor Walsh: The economy is moving. Added 4M jobs
- USD is the strongest of the majors after the US jobs report
- Canada July employment change +94.0K vs +177.5K expected
- July US non-farm payrolls 943K vs 870K estimate
- BOE Bailey: There is downside risk to inflation of supply bottlenecks get unblocked
- The CAD is the strongest and the JPY is the weakest as NA traders enter for the day
The awaited jobs report was released today at 8:30 AM ET, and it did not disappoint. The net change in nonfarm payroll jobs was 943K. That was above the 870K estimate. Moreover, the June report was revised higher by 88K to 938K, and the May report was also revised higher by 31K to 614K (from 583K).
Overall, with revisions, the US added 1.062M jobs which is good news for the economy.
Making the report even more impressive was that the unemployment rate tumbled to 5.4% from 5.9% last month. The underemployment rate fell to 9.2% from 9.8%. Hourly earnings rose by 0.4%, and the year on year measure is now up 4.0% year on year versus 3.9% estimate (and 3.4% last month).
- Leisure and hospitality led with a gains with 380K jobs added.
- Government added 240K
- Professional business services, +60K
- education and health services, +87K
- transportation and warehousing, +49.7K
The one cautionary tone is that the local government education category (part of Government) is out of sync with the seasonal adjustments due to Covid. It showed a oversized 220K increase in jobs and may have a "give back" in coming months. Nevertheless, the report was still very solid.
As a result, traders will now be looking for Fed comments as the market prepares for a taper that may/should be sooner than expected.
Fed's Clarida said this week that he could see a December taper . Fed's Wallers, Bullard and Kaplan would rather start the taper sooner rather than later so the Fed could have flexibility to tighten interest rates in 2022 if needed. Next week, the market will hear from Fed's Bostic, Evans, George and Barkin are all expected to speak next week. I would imagine, it will be hard to keep Fed's Bullard from an interview at some point (he is not shy especially if he is right and he has been one of the more hawkish Fed officials and will be voting in 2022).
Goldman Sachs increased their chances for a November taper to 25% and December 55%. The Fed Chairs Jackson Hole speech (the event takes place from August 26 to August 28) becomes days to circle on the calendar for taper clues.
The reaction in the markets saw:
- The USD move higher
- Flow in stocks into the Dow cyclicals and out of technology (i.e. Nasdaq)
- Higher US rates
- Lower gold.
Looking the strongest to weakest in the forex market, the USD is ending the day as the run-away strongest of the major currencies. The CHF and the AUD were the weakest.
In the US stocks, the Dow and S&P indices both closed at record levels with the Dow leading with a gain of 0.41%. Leading the charge today were financials which rose 2.01%. Materials (+1.47%) and Energy (+0.94%) were also winners today. Discretionary (-0.73%), real estate (-0.25%) and technology (-0.12%) were the laggards.
The Nasdaq index light with a -0.4% decline after closing at a record level on Thursday. Despite the decline today, the NASDAQ index led the way with a 1.0% gain for the week.
In the European market today, the major indices all closed higher but off their highs levels. The France's CAC rose by 0.53% and closed at its highest level since 2000. It is only 100 points or so from its all-time record high.
In the US debt market, yields this week trade as low as 1.127% in the benchmark 10 year yield. The yield is going out the week at 1.293% up nearly 16 basic point from the weeks low. Next week will be a key test for the global demand of US debt, as the U.S. Treasury will auction off:
- $58 billion of 3 year notes on Tuesday,
- $41 billion of 10 year notes on Wednesday, and
- $27 billion of 30 year bonds on Thursday.
In other markets today:
- Spot Gold tumbled $41.50 or -2.3% to $1762.76
- Spot Silver fell $0.83 or -3.33% to $24.29
- WTI crude oil futures felt $-1.14 or -1.66% at $67.97. For the week, crude oil fell over 7% from Friday's closing levels
- The price of bitcoin rose $1838 to $42,733.48. The price is trading at the highest level since May 19, 2021. The 200 day moving average going into the weekend is currently at $44,822. Will traders squeeze the price toward that key MA level? I would not be surprised.
Wishing you all a great and healthy weekend. Thank you for your support this week. Adam Button will be back on Monday.
