US DOLLAR INDEX MOVES LOWER DESPITE BETTER THAN EXPECTED U.S JOBS FIGURE

BETTER THAN EXPECTED U.S JOBS FIGURES

The U.S dollar index moved lower this week, despite a far better than expected Nonfarm Payrolls jobs figure. The June employment report showed that 222,000 jobs had been created, far exceeding the expected figure of 178,000.

Inside the report, U.S wage data remained subdued, with monthly average hourly earnings showing only a minor uptick, whilst the annual figure declined. The U.S dollar was sold against a basket of currencies, as the report highlighted inflation continues to hold back wage increases throughout the American economy.

STRONG ISM MANUFACTURING

The U.S dollar index strengthened following the strongest ISM Manufacturing report since October 2016. The headline PMI came in at 57.8, far better than the forecast 55.2 reading, a strong improvement from the previous month reading. The U.S manufacturing economy grew for the ninety-seventh consecutive month.

The ISM New Orders Index registered 63.5%, an increase of four percentage points from the May reading of 59.5%. The Production Index registered 62.4%, up 5.3 percentage point versus the May reading of 57.1T. The Employment Index registered 57.2 percent, a gain of 3.7 percentage points from the 53.5% May reading.

RBA DISSAPOINTS MARKETS

The Reserve Bank of Australia policy meeting proved to be disappointing for investors, who were hoping for more RBA hawkish policy stance on interest rates. During the policy statement, the Reserve Bank of Australia effectively poured cold water on any idea of the upcoming rate hike.

The RBA kept the base interest rate unchanged at 1.50 percent, and delivered a balanced statement, highlighting a number of concerns, including weak Australian wage growth and rising household debt problems.

The Australian dollar fell towards the 0.7600 cents level against the U.S dollar after the policy statement was released, as traders scaled back bets on an August rate hike from the RBA.

HAWKISH ECB MINUTES

The minutes from the European Central Bank June meeting showed, that European policymakers are open to reducing their monetary stimulus, but are likely to move slowly out of fear of causing market turmoil.

ECB Central Bankers discussed the possibility of tightening during the June, dropping a long-standing pledge to boost the European Central Banks 2.3 trillion euros bond purchase program if necessary.

However, they decided against doing so, because the euro zone's economic recovery had yet to meet a prime objective, higher core inflation.

The euro moved sharply higher against a basket of currencies following the ECB minutes, with the EURUSD pair moving back above the key 1.1400 level, after earlier touching a weekly low of 1.1313.