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The Euro-zone unemployment rate increased to 7.4% for May from 7.3% previously, although this was below consensus forecasts of 7.7% which helped underpin the Euro. Narrow ranges prevailed ahead of the New York open ahead of the latest US jobs data with no major developments in the EU recovery fund.

US non-farm payrolls increased 4.80 million for June after a revised 2.70 million increase the previous month and above consensus forecasts of around 3.00 million. There was a further strong rebound in jobs within the leisure and hospitality sector with retail jobs also posting a strong recovery on the month.

The unemployment rate declined to 11.1% from 13.3% previously and below market expectations of 12.3% as workers returned from temporary lay-offs. There was, however, a further increase of close to 600,000 in the number of longer-term unemployed while average wages declined on the month as lower-paid workers returned to work. Initial jobless claims declined slightly to 1.43 million in the latest week from 1.48 million previously, although this was again above consensus forecasts for the week which maintained caution over the outlook. There were significant concerns that the labour-market recovery would stall as states are forced to suspend re-opening.

The dollar initially edged lower following the data as risk appetite strengthened, but it gradually regained ground amid reservations over the outlook and the Euro lost ground with a retreat to lows near 1.1220. US markets will be closed for the Independence Day holiday on Friday which is liable to narrow trading ranges. Coronavirus uncertainty will remain an important element with weaker confidence in fundamentals offset by possible defensive demand and the Euro was around 1.1240. 


The dollar and yen were again trapped in relatively narrow ranges during the day. There was net US support from the jobs data and yields moved higher, but there was still an important element of caution over domestic coronavirus developments and Wall Street indices retreated from their best levels.

Florida reported a further sharp increase in daily new infections for the day and overall US new cases increased to a record high around 55,000 on the day.

There was a recovery in Japan’s PMI services index to 45.0 from 26.5 and above the flash reading of 42.3. China’s Caixin PMI services index increased strongly to 58.4 for June from 55.0 previously and above consensus forecasts of 53.2. This was the strongest reading since April 2010 with a sharp gain in business confidence, although there was a further decline in employment. The data overall helped underpin confidence in the Chinese and global outlook which underpinned risk.

There were still important reservations over US-China relations with the US Senate passing legislation to penalise banks doing business with China.

Asian equity markets made limited headway on Friday which helped underpin confidence, although US futures edged lower. Narrow ranges prevailed with the dollar settling around 107.50 as both currencies failed to make significant headway in cautious markets.


Sterling maintained a robust tone in early Europe on Thursday with a move above the 1.2500 level against the dollar as the firm tone in risk appetite helped underpin confidence. The latest round of face-to-face UK/EU trade talks was completed a day ahead of schedule with Friday’s planned meeting between EU Chief Negotiator Barnier and UK counterpart Frost cancelled. Both sides reported that little progress had been made with the usual areas of disagreement in evidence as Barnier again criticised the UK stance. Officials did, however, stated that the EU position was now understood better and Barnier repeated that agreement was possible.

Sterling recovered from a brief dip with the Euro retreating to test the 0.9000 area, although it failed to hold 1.2500 against the dollar as the US currency recovered.

UK consumer confidence recovered to -27 for the final June reading from the flash reading of -30 and slightly above consensus forecasts. There has been a decline in demand for Sterling puts in options markets which should help support the UK currency, although underlying sentiment is liable to remain fragile, especially with further concerns over weakness in the labour market. The UK currency held steady around 1.2470 on Friday with pre-weekend positioning likely to be a significant factor. 


Swiss consumer prices were unchanged for June compared with market expectations of a 0.1% with the year-on-year rate unchanged at -1.3%.  The data will maintain underlying National Bank concerns over the risk of deflationary pressures within the economy and maintain resistance to Swiss franc gains.

The Euro initially held a firm tone against the franc but retreated to 1.0620 later in the day amid wider single-currency losses. The dollar was able to make only marginal net headway on the day. The franc held a firm tone on Friday despite positive underlying sentiment towards the global economy with the US currency around 0.9460.



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