It’s Nonfarm Payrolls. Will It Be a Green Light for the FED?

Earlier in the Day:

The economic calendar was on the lighter side once more through the Asian session this morning.

Japan’s May household spending figures provided direction in the early part of the day.

For the Japanese Yen

Household spending surged by 5.5%, month-on-month, in May, coming in well ahead of a forecasted 1.2% increase. Spending had fallen by 1.4% in April. Year-on-year, household spending humped by 4%, off the back of a 1.3% rise in April. Economists had forecast a 1.4% rise.

According to the Statistic Bureau,

• Spending on furniture and household utensils surged by 12.8% year-on-year.
• There were also sharp increases in spending on education (+7.8%), fuel, light and water charges (+6.9%), housing (+6.7%), and culture and recreation (+5.2%).
• Spending on medical care fell by 0.8%, which was the only negative.

The Japanese Yen moved from ¥107.817 to ¥107.812 upon release of the figures. At the time of writing, the Japanese Yen was down by 0.04% to ¥107.86 against the U.S Dollar.

Elsewhere

At the time of writing, the Kiwi Dollar was up by 0.09% to $0.6693, while the Aussie Dollar was up by 0.10% to $0.7029. The pair found early support ahead of today’s NFP numbers out of the U.S, which could signal a FED rate cut later this month.

In the Asian equity markets, the Nikkei was up by just 0.01% in spite of the jump in household spending and softer Yen. The ASX200 was up by 0.35%. In the futures markets, the U.S majors were in positive territory early on, supporting the Asian markets. The Dow Mini was up by 16 points at the time of writing.

The Day Ahead:

For the EUR

It’s a relatively busy day ahead on the economic calendar.

Germany factory order and industrial production figures for May will provide direction in the early part of the day.

Forecasts are EUR negative, with factory orders and industrial production forecasted to fall. Germany’s May Manufacturing PMI survey showed that new orders received fell for an 8^th consecutive month, supporting the negative forecast.

With orders on the slide and the manufacturing sector in contraction, industrial production figures are unlikely to be too impressive either…

Outside of the numbers, rising tension in the Middle East and any updates from the U.S – China trade talks will also need to be considered.

At the time of writing, the EUR was down by 0.03% to $1.1282.

For the Pound

It’s a quiet day ahead, with house price figures due out in the early part of the day likely to have a muted impact on the Pound.

With Conservative Party members already casting their votes, the focus will be on the leadership race on the day. Members were due to receive their postal ballots by next Tuesday ahead of the 9^th July televised debate.

At the time of writing, the Pound was flat at $1.2579.

Across the Pond

It’s a big day for the Greenback. With the markets having priced in a July rate cut, it’s all about the nonfarm payroll and wage growth numbers.

The FED has stated that it would watch employment numbers closely and, following June’s weak figures, another disappointment could see Trump and the markets get their wish…

Outside of the stats, any chatter from the Oval Office on trade and Iran will also need to be considered.

At the time of writing, the Dollar Spot Index was down by 0.01% to 96.757.

For the Loonie

It’s a busy day ahead for the Loonie. June’s employment and Ivey PMI are due out this afternoon. We can expect the Loonie to be particularly sensitive to the numbers ahead of next week’s BoC monetary policy decision.

Outside of the numbers, any threat from the U.S of action against Iran would support crude oil prices and the Loonie.

The Loonie was down 0.02% at C$1.3055, against the U.S Dollar, at the time of writing.