FX traders are eagerly awaiting tomorrow’s release of the U.S. Labor Department’s non-farms payroll data for July to either confirm the Federal Reserve’s assertion that the all-important labor sector still has room for improvement. A recent poll showed that analysts expect that new hires will have declined to 233,000 jobs from June’s 288,000; Wednesday’s ADP release of private sector jobs data failed to even meet analysts’ expectations of 230,000 with an actual decline to 218,000 from 281,000 in June. With July now ended, the U.S. Dollar recorded its best monthly performance since mid-2013, but the outcome of tomorrow’s labor data will set the tone for the greenback’s future.
As reported at 11:39 a.m. (JST) in Tokyo, the U.S. Dollar Index steadied at 81.449 .DXY; the July average for the Index rose 2.1% to a near 11-month high at 81.573 .DXY. The USD/JPY struck a 4-month peak at 103.15 Yen before retreating to 102.78 Yen while the EUR/USD traded at $1.3389, very close to a 9-month low which was hit earlier this week.
E.U. CPI Data Weighs
Eurozone inflation data which was released on Thursday showed that personal inflation fell to 0.4% (annualized) in July, against expectations that CPI would be unchanged at 0.5%; Eurozone inflation hasn’t been that low since 2009. That will weigh heavily on the common currency and put additional pressure on the European Central Bank to provide additional stimulus to avoid deflation. Analysts, however, doubt that there will be any immediate policy changes when the ECB meets next week however there is some hope that Mario Draghi will at least hint at future intent.