Friday, July 8, 2016

EURUSD dropping back to 1.10

While we saw a spike in the dollar following the data, with EURUSD dropping back to 1.10 immediately after the release, and a corresponding sell-off in Gold, this data is unlikely to change the near-term outlook for Fed interest rates. While I wouldn’t write off a hike at the end of the year, assuming the jobs data between now and then is very good and wage growth shows signs of improvement, the risks posed by Brexit in the near-term are likely to deter the Fed from tightening and unnecessarily causing further problems for both the economy and financial markets.
Update – Since the release, both the dollar and Gold have rebounded and now trade close to pre-release levels. Possibly a sign that expectations are relatively unchanged after the June jobs numbers.