Currency markets shrug off sparkling Nonfarm Payrolls

With the US economy continuing to grapple with the Covid-19 pandemic, we are witnessing employment numbers, both good and bad, in unchartered waters. Just two months ago, non-farm payrolls plunged by a staggering 20 million.

However, the economy has regained its footing somewhat since those dark days of April. The June jobs report showed that payrolls climbed 4.80 million, which follows a May reading of 2.509 million. Still, these strong numbers did not shake up the Currency Markets on Thursday.

Currency markets refused to into the US employment data euphoria overnight, preferring to sit sullenly in the corner like a teenager who has been told to get off the internet during grandma’s visit. The US dollar was barely changed as the dust settled, with the dollar index almost unchanged at 97.26.

Currency markets have refused to budge all week, even as equity markets reached higher. It appears that currency traders have rather more concerns about COVID-19 across America’s sunbelt and potential collisions with China, than the v-shaped FOMO herd populating the stock market.

The dollar remains anchored mid-range versus the Euro, Pound, Yen, Australian and Canadian dollars. USD/JPY though has traced out impressive technical resistance at 108.00 and could well ease back to the 106.00 regions from 107.50 this morning. The USD/CNY has ranged between 7.0500 and 7.1000 for most of June, and at 7.0650 today gives no clue that a significant dollar move is upon us.

Monthly services PMIs are released across Europe this afternoon. They should all show an improving trend as Europe bounces back from the Covid-19 lockdowns. That should temper any corrective downward pressures on the Euro into the week’s end.

The waning momentum of the rotation out of dollars trade suggests that it may yet continue to correct higher versus the majors in the near-term. Most likely, though, currency markets are preferring something more concrete to get their teeth into, before a more energetic move one way or the other. Asian markets remained very much in weekend mode today.