Marketwatch North America

Daily Insights
July 5, 2024

Change in Nonfarm Payrolls for June was 206k,190k estimate. May payrolls were revised down to 218k from the 272k originally reported. Private Payrolls for June were 136k, falling short of the 160k estimate. May private payrolls also saw a downward revision, to 193k from 229k.

The Unemployment Rate ticked up to 4.1% (4.0% estimate and previous), its highest since November 2021.

While the payrolls data may not be great, the state of labor conditions in the U.S. is still good. Despite this, markets have chosen to focus on the downward revisions and see today’s data as giving the Fed a free hand to begin rate cuts as early as September. Fed Funds futures now imply a 74.5% chance of a 25 basis-point cut at the FOMC’s September 18th meeting and a 76.7% chance of a cut at the December 18th meeting. U.S. Treasury yields are lower in all tenors, with the 10-year yield now at 4.31%, down from 4.49% on July 1st.

The market getting ahead of itself, followed shortly by the Fed repeating its goal of ‘sustained inflation near the 2% target’ is now an all too familiar pattern. The chance of a September rate policy action is more likely 50/50 at best. Fed Chairman Powell will reiterate the Fed’s criteria for rate cuts during next week’s testimony to the Senate Banking and House Financial Services committees and bring the market’s enthusiasm back in line.

The dollar dropped following the jobs data leading to a 0.17% decline in the U.S. Dollar Index, now in its 4th consecutive daily loss. Today’s dollar spot returns: -0.54% vs. AUD, -0.51% vs. GBP & NZD, -0.46% vs. JPY, -0.45% vs. CHF, -0.40% vs. EUR, -0.37% vs. MXN and -0.07% vs. CAD.

Canadian Net Change in Employment for June was -1.4k, below the 25.0k estimate (even getting the direction wrong). And Canada’s Unemployment Rate increased to 6.4% from the previous 6.2%.

The U.K.’s Labour Party won Thursday’s general election in a landslide, ending 14 years of Conservative Party rule.

Economic Calendar

USD - FOMC Member Williams Speaks
CAD - Employment Change
CAD - Unemployment Rate
USD - Average Hourly Earnings m/m
USD - Non-Farm Employment Change
USD - Unemployment Rate
CAD - Ivey PMI
USD - Fed Monetary Policy Report
EUR - ECB President Lagarde Speaks

Market Indicators

Currency Pairs
Pair High Low
usd/jpy 161.391 160.306
eur/usd 1.0842 1.07979
gbp/usd 1.28141 1.27547
aud/usd 0.67093 14
usd/cad 1.36526 1.3602
eur/gbp 0.8478 0.84515
usd/mxn 18.1871 17.9983
Equities and Commodities
S&P 500 5542.26
NASDAQ 20226
DOW 39341.4
GOLD 2375.43
SILVER 30.82

This document is for information purposes only and does not constitute any recommendation or solicitation to any person to enter into any transaction or adopt any trading strategy, nor does it constitute any prediction of likely future movements in exchange rates or prices or any representation that any such future movements will not exceed those shown on any illustration. All exchange rates and figures appearing are for illustrative purposes only. You are advised to make your own independent judgment with respect to any matter contained herein.