Daily Afternoon Report 08.07.2016

The dollar erased losses and moved higher against the other major currencies today, after data showed that the U.S. created far more jobs than expected last month, adding to optimism over the strength of the job market.

The U.S. Department of Labor said that the economy added 287,000 jobs in June, compared to expectations for a 175,000. The number of jobs created increased by 11,000 in May, whose figure was revised from a previously estimated gain of 38,000.

The report also showed that the unemployment rate ticked up to 4.9% last month from 4.7% in May, compared to expectations for a rise to 4.8%.

Meanwhile, average hourly earnings rose 0.1% last month, disappointing expectations for a 0.2% gain and after a 0.2% increase in May.

The report came after data yesterday, showed that the number of individuals filing for initial jobless benefits in the week ending July 2 declined expectedly, while payroll processing firm ADP said non-farm private employment rose more than expected last month.

In the U.K., investors shrugged off a report by the Office for National Statistics today showing that the country’s goods trade deficit widened to £9.88 billion from £9.41 billion in April, whose figure was revised from an initial deficit of £10.53 billion.

Economists had expected the goods trade deficit to come in at £10.65 billion in May.

But the pound still remained under heavy pressure, as Britain’s shock decision to leave the European Union continued to fuel uncertainty over the consequences of the U.K. vote on the country’s economy.

Market participants were still speculating whether or not the Bank of Japan will soon introduce fresh easing measures to boost the economy.

BoJ Governor Haruhiko Kuroda said yesterday that the central bank was ready to expand monetary stimulus further if needed to achieve its 2% inflation target and affirmed his confidence over Japan’s recovery prospects, making no mention of the current Brexit turmoil.

Earlier today, official data showed that Japan’s adjusted current account surplus narrowed to ¥1.41 trillion in May from ¥1.63 trillion the previous month. Analysts had expected the current account surplus to narrow to ¥1.52 trillion in May.

Elsewhere, USD/CAD rose 0.30% to trade at 1.3040 after official data showed that the number of employed people in Canada fell by 700 in June, confounding expectations for an increase of 5,000 and after a 13,800 climb the previous month.

Canada’s unemployment rate ticked down to 6.8% last month from 6.9% in May, beating expectations for a rise to 7.0%.

The U.S. dollar index, which measures the greenback’s strength against a trade-weighted basket of six major currencies, was up 0.25% at 96.58, the highest since June 27, after hitting lows of 96.08 earlier in the session.