Once again the latest U.S Non-farm payroll report underwhelmed global markets on Friday showing a meagre 80,000 new jobs in June from a previous 77,000. Economists forecast were for employment growth of 100,000. With the bar already set low, the latest jobs statistics confirmed a marked slow-down in employment growth over 2012, with second quarter growth averaging 75,000 per month, in comparison to the first quarter average of 226,000. It's generally accepted the U.S economy needs to add in excess of 200,000 new jobs per month to maintain a standard level of economic growth. The greenbacks safe-haven appeal kicked into gear after Friday's jobs report, despite what some analysts may suggest strengthens the case for further Fed stimulus, more specifically quantitative easing. The dollar surged against most major counterparts with the exception of the Japanese Yen which remained the overall currency of least resistance. While the headline number may have kept the QE3 dream alive, it failed to provide the conclusive evidence required for the Fed to embark on such easing initiatives.
Demand for the Euro materially receded late last week with both the ECB policy decision and U.S non-farm payrolls sending the Euro deeper into negative territory, with the EURUSD pair setting a new two-year low of $US1.2259 on Friday. While it's apparent Euro weakness on Friday was - for the most part - reactive to the U.S jobs data, the Euro's appeal has continued to suffer with markets remaining unconvinced steps taken by both European leaders and the European Central Bank will enough to reverse the balance of risk back in favour of the Euro area.
The Australian dollar also reversed course on Friday following less than inspiring U.S job data coinciding with solid losses across U.S equities. The local unit rose to fresh 2-month highs of 103.29 US cents on Thursday before a mild downturn accelerated in the ensuing period of the Non-farm Payroll release. Previous supportive behaviour displayed at 102.4 was breached with the Aussie falling to lows of 101.79 US cents before a moderate rebound towards the close.
The week ahead is once again packed full of event risk with German CPI, FOMC minutes and BoJ rate decision just a few of the top-tier releases. After surprising the market with a rate cut last week, China will remain in the spotlight this week with a number of key data points due for release, which will undoubtedly govern expectations on the likelihood of both near-term interest rate cuts and a lower reserve ratio requirement for banks. First up on the docket this week will be June CPI which is expected to see inflation drop to 2.3 percent from 3 percent in May. Among other mid-tier themes, new Yuan loan data and second quarter GDP will be influential for the Aussie dollar. Growth is expected to have moderated in the second quarter to 1.6 percent from a previous 1.8 percent to represent annual growth of 7.9 percent. The domestic week ahead will see the spotlight on employment data which is expected to show no change in June from previous jobs growth of 38,900, with the official unemployment rate expected to edge higher from 5.1 to 5.2 percent.
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