June US job growth fell short of forecasts, easing pressure on the Fed to tighten policy. The dollar weakened against major peers, with USD/JPY retreating from highs.
US Job Growth Slows, Dollar Weakens Amid Mixed Market Reaction
The US dollar slipped on Friday following a softer-than-expected June non-farm payrolls report, which showed 57,000 jobs added versus a consensus forecast of 110,000. Initial jobless claims also came in slightly below estimates at 215,000. The data initially spurred a sell-off in the greenback, a rally in bonds, and gains in equities, though moves were quickly reversed amid thin pre-holiday trading.
The disconnect between job creation and the recent JOLTS report, which indicated a two-year high in job openings, raised questions among traders. Notably, hospitality sector job losses ahead of the World Cup added to the uncertainty. The lack of sustained momentum in the dollar's decline suggests markets are cautious about drawing firm conclusions ahead of the July 4th holiday.
BOE's Mann Flags Inflation Risks, Fed's Daly Notes Strong Investment
Bank of England policymaker Megan Greene emphasized upside inflation risks in June, signaling potential caution in future rate decisions. Meanwhile, Fed's Philip Daly highlighted robust investment growth in the US, though the payrolls miss may temper expectations for aggressive policy tightening. The 10-year Treasury yield edged up 1 basis point to 4.48%, while WTI crude held steady at $68.48.
Technical Outlook: USD/JPY Retreats from 160.65 High
The dollar-yen pair touched 160.65 post-report but stabilized around 161.14, with Japanese officials hinting at stealth intervention to curb excessive yen weakness. Gold rose $83 to $4,113, reflecting renewed demand for safe-haven assets. The S&P 500 closed 0.3% lower as traders parsed the mixed signals.
Traders will monitor upcoming Fed commentary and geopolitical developments, including tensions between Iran and Israel, for directional cues. The euro initially surged to 1.1472 but retreated 40 pips, underscoring the fragile risk appetite.
Risk Disclaimer: Market volatility remains elevated amid evolving macroeconomic data. Traders should exercise caution and consider position sizing in line with their risk tolerance.
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