U.S. Dollar tight as markets digest policy and data

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U.S. Dollar tight as markets digest policy and data

AUGUST 05, 2021

The U.S. Dollar is in familiar ranges following a day of reaction to very low payroll creation in July, per the private ADP numbers. 

Overview

Tomorrow, we will get the official Employment Situation in which figures for Non-Farm Payrolls are expected to show an addition of 870K jobs for July. Already investors and traders are preparing for what could be a disappointment or shock if no relation to what the ADP folks gathered.

At the time of writing, the release of Initial as well as Continuing Jobless Claims revealed that the latter came in lower than expected, perhaps a break in labor. The expectation for Continuing Claims came in at 2.930MM under the expected 3.255MM, so we shall see what is behind it, maybe return to work for many.

This morning we are also digesting news on the diplomacy front that is of concern with the U.S. approving arms sales to Taiwan, a move that is likely upsetting China’s leadership. Recent Chinese crackdown on their territories such as Hong Kong has kept many around the world on edge who see it as an overtake of private free-market pockets where business with Chinese firms can be done.

Taipei has long been a target of the Chinese government for re-integration as the Taiwanese are Chinese who do not want communism. Thus far the buck seems on a weakening trend, especially since markets seem more positive, but tomorrow will be more action-packed and numbers can give some clarity as to where labor is in America.

What to Watch Today…

  • No major economic events are scheduled for today

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EUR   

The Euro is holding on to its recent gains as figures for the Euro-zone are showing improvement and delta-variant restrictions for travel between countries are being eased. French tourists can now visit the U.K. after certain restrictions wee lifted. In Germany, Factory Orders impressed by coming in double the expected pace of growth at 4.1% over 2.0%.

Meanwhile, the Euro-zone Retail Sales slowed down a bit in June from what was expected, but the yearly average is up from 4.4% to 5.0%. Expect figures to id the shared currency, especially if it combines with a more confident European Central Bank in the months ahead.

GBP  

The Pound was rising earlier, but it has erased some of its advancement as Bank of England Governor Andrew Bailey closes his press conference post-announcement. The BOE is saying that they will not be tapering their QE purchases soon and will not start putting an end to the program until the interest rate can be at 0.5%.

Overall, seems like Bailey is keeping it very realistic, that he is afraid of unemployment increasing and that the variant does indeed cause concern about economic growth.

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