This Friday being the first one for the month of July, it is, of course, the day we get the payroll report. After last month’s very disappointing reading, the economists and other prognosticators are looking for a bounce. The consensus view is for the payroll growth to be about 140,000 for June, well ahead of the 75k figure reported for May. The Unemployment Rate is expected to remain at 4.6%, but Average Hourly Earnings are seen at 0.3% vs. 0.1%.
These figures are very often the source of significant market volatility. If they come in away from expectations, look for a reaction. The market seems to be more prone to a stronger negative dollar reaction than a positive one these days – meaning that if the jobs figures came low once more, the USD would probably suffer more due to concerns about the Fed halting the rate increases than if the figure came in higher.
A couple of releases earlier in the day could prime the markets a bit. German Industrial Production is expected to show a marked decline for May (0.6% vs. 1.6%). The Canadian employment report is also due out and likely to present a weaker job market in that country, with unemployment ticking up from 6.1% to 6.2%. Unless one or both of those numbers is well off of expectations, however, look for the currency market to come in to the U.S. release mostly flat, as it generally does in such cases.
The USD is in a broad consolidation against the other major currencies at the moment – at least in terms of what’s happening on the daily charts. It’s a bit of a mixed bag as to where things are likely to go next, though. The Dollar has been strong of late against the likes of the GBP and JPY. It has made ground against the EUR and CHF as well, but not nearly as much.
Friday’s jobs report report certainly has the potential to turn consolidation in to directional movement. I would be slightly more likely to lean toward a new round of USD strength given the longer-term bias it’s had over the last month or so, but that’s definitely no sure thing.