As Nonfarm Payrolls looms, could we see a third consecutive disappointment?.

June’s highly anticipated Nonfarm Payrolls report due out today, and ahead of a long weekend, could provide other currencies an opportunity to swiftly bring the greenback down.

The US gained 559,000 new positions in May but fell short of estimates once again. Many have blamed generous unemployment benefits and stimulus checks, while others mention that the COVID crisis is a long way from over, and that some people are afraid of resuming interaction with others. The skill mismatch was also compounded by a shortage of raw materials. Have all these issues been resolved between May and June? The answer is probably not… yet expectations remain elevated. The economic calendar is pointing to an increased of 700,000 jobs in June, substantially above May’s hiring. Could this all lead potentially to a third consecutive disappointment?

Jerome Powell has created high expectations however, a lower number than many economists predict would be far worse. Even a satisfactory figure would serve as a reminder that the 7.6 million jobs lost during the pandemic will take a long time to restore. This alone should be enough to cause a currency market correction, indicating that the US Dollar is still overvalued.

Focusing on the UK and Europe, data has revealed how the UK’s manufacturers have underperformed their peers in the eurozone to the greatest extent for over two decades so far this year, coinciding with the end of the Brexit transition period. UK suppliers of components to other firms, in particular, have seen only a marginal increase in export sales. This indicates that the UK is largely missing out on the recent surge in demand for inputs from the world’s factories.

Economic Calendar

13:30USD Nonfarm Payrolls (JUN)700K559K
13:30USD Goods and Services Trade Balances (MAY)71.4B68.9B
13:30USD Average Hourly Earnings (YOY)(JUN)3.7%2%
13:30USD Labor Force Participation Rate (JUN)61.6%
13:30USD Average Hourly Earnings (MOM)(JUN)0.3%0.5%
13:30USD U6 Underemployment Rate (JUN)10.2%
13:30USD Unemployment Rate (JUN)5.7%5.8%
13:30ECB's President Lagarde speech
13:30CAD International Merchandise Trade (MAY)0.37B0.59B
14:30CAD Markit Manufacturing PMI (JUN)57
15:00USD Factory Orders (MOM)(MAY)1.5%-0.6%

*All rates shown are indicative of interbank rates and should only be used for indication purposes only. It is important to note that foreign exchange rates fluctuate and that rates may vary depending on the amount and the base currency that is purchased or sold. Rates are correct as of 8:00am UK time. CentralFX are not responsible for the rates shown.