• USD is broadly stronger as US jobs data trumps expectations

  • EUR weakens as the ECB extends current monetary policy

  • Commodity currencies weaken as Egypt increases risk aversion

USD – The dollar rallied across the board after the release of non-farm payroll figures came in better than expected. The labor market announced that they created 195,000 jobs in June, above the 165,000 forecast, while the unemployment rate held steady at 7.6%. Just as important, were the payroll revisions for April and May, where 70,000 more jobs were created than previously reported. The job figures all but cemented analyst’s expectations the Fed will start winding down its quantitative easing program as early as September. Also assisting the dollar was the continued flight to safe haven currencies in the wake of Egypt’s deposed president Morsy who remains under house arrest. Look for thin trading today post the July 4th holiday.

EUR – The euro fell as low as $1.2805 on the interbank market after the release of job figures from the US and on the heels of the ECB’s announcement to keep monetary policy accommodative for an extended period. ECB president, Draghi, stated yesterday that rates would be at current or lower levels “for an extended period of time.” Also pressuring the single currency was ECB Executive Board member, Benoit Coeure who stated today that there is a continued risk a Eurozone recovery might not only be delayed a few quarters. Look for the euro to weaken further with the growing pressure coming out of its peripheral nations.

GBP – Pound sterling plunged to hit its lowest point in nearly 4 months against the dollar after Mark Carney, governor of the BoE, made comments suggesting that an interest rate hike is not in the near horizon. Now, Carney will find it difficult in giving financial markets a clearer guidance on how long borrowing costs are likely to stay at record lows. However, the BoE is expected to get more specific when it unveils its plans for the so-called forward guidance next month.

JPY – The yen weakened slightly vs. the greenback, breaking through the 100 mark on the heels of the favorable US Non-Farm Payrolls data today. Next week, the BoJ is scheduled to announce its latest interest rate decision, where many analysts expect the board to continue its easing cycle through the second half of the year. Slowing down the slide in USD/JPY however, is the political unrest in Egypt, which has added demand for the yen as it continues to serve as a safe haven currency.

Commodity Currencies – Commodity currencies are broadly weaker against the greenback after a better than expected US jobs data bolstered expectations the Fed would start winding down its quantitative easing program sooner rather than later. The CAD hit a 21-month low vs. the USD, while the AUD and NZD dipped 0.7% and 1.6%, respectively. Meanwhile, ongoing political turmoil in Egypt has pushed the price of oil over $106 a barrel on supply concerns. Gold prices on the other hand struggled, plunging almost 3% today in early trading.

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