he U.S. dollar lost ground against the sterling, yen and Swiss franc on Friday as considerably weaker-than-expected U.S. jobs data raised expectations that the U.S. Federal Reserve will leave interest rates low well into next year.
The U.S. Bureau of Labor Services (BLS) June employment report surprised the market with a modest gain of only 18,000 jobs in payroll employment compared to a consensus forecast of 88,000. Payroll gains for April and May were also revised downwards.
However, as we start the new week, the focus should not the weakest US jobs data in nine months, according to Marc Chandler at Brown Brothers Harriman.
“Instead, the significant development this week is the pressure on Italy. Italian bonds sold off every day this past week and this brought the 10-year benchmark yield to its highest level in 9 years,” comments Mr. Chandler. “After all, it was well appreciated that for a number of reasons the US economy has lost some momentum in H1. Even the Federal Reserve has acknowledged this.”
Another point of focus this week should be the Chinese CPI figures released over the weekend, which continues to rise, standing now at 6.4% in June from 5.5% the previous month. This indicates that the Chinese economy is showing further signs of slowing down.
EUR/USD has opened the week with a 50-pip downside gap open in the 1.4205 price zone. According to Sean Lee, Editor at Forex Live, next key support lies near 1.4150.
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