The dollar index fell to one-month lows on Friday after U.S. non-farm payrolls data came in well short of expectations, leaving markets with the impression that the Fed will be in now hurry to start tapering asset purchases, even though they're widely expected to make an announcement sometime later this year.
Fed Chair Jerome Powell’s desire for further progress in employment growth during his speech to the Jackson Hole symposium last week should still be ringing in investors' ears.
Despite a robust rise in average earnings and a dip to 5.2% in the unemployment rate, non-farm payrolls rose by just +235k, well below the 728k Reuters consensus forecast and even shy of the lowest projections in that survey for 375k.
July data was revised higher by 110k, but the headline miss coupled with position reduction ahead of the long U.S. Labor Day holiday weekend weighed on the dollar index, which was down 0.26% late in the session.
EUR/USD gained 0.16% to 1.1895 as traders continued to re-establish EUR longs amid recent hawkish ECB comments and the likelihood of U.S. rates remaining lower-for-longer.
USD/JPY fell 0.29% to 109.62, below 100-DMA support at 109.71 as the payrolls miss increases the likelihood that in the near-term U.S.-Japan rate differential will remain at current levels.
GBP/USD was up 0.41% at 1.3889, a shade below its session, and 4-week high at 1.3891.
With the Fed awaiting more data before beginning its asset taper, sterling bulls are eyeing futures contracts hinting at a BoE rate hike in H1 2022, ahead of the Fed’s expected hike late in Q4, as indicated by the U.S. Eurodollar strip.
That could facilitate a potential run to late-July highs by 1.3984.
AUD/USD shrugged off commodity weakness, rallying 0.8% to 0.7461, moving deeper into the daily cloud, but found resistance at 0.7478, just above its upper 30-day Bolli at 0.7475.
Aussie traders focus shifts to Sept.
7’s RBA MPC meeting.
Equities lifted off session lows in the U.S. afternoon while U.S. Treasury yields were a touch higher.
Bitcoin was up 2.2% at $50.3k having probed above $51.03k’s 61.8% Fib resistance to a new four-month high at $51.05k before slipping a touch.
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