JOLTS jolted the dollar

News   •   Aug 10, 2017 10:20 +08

The market bounced back to life Tuesday as the Greenback was jolted by the JOLTS data.

The JOLTS jobs data was through the roof printing an all time record high and ignited a USD rally. But that was only half the positive storyline as a boisterous NFIB small business survey painted a much better picture for the US economy than most believed.

Two-way dollar risk is creeping back into the market calculus as chatter builds that the Fed curve is underpriced.

Speaking of Fed curves, the market is very keen to hear Fed Bill Dudley on Thursday - he’s been off the wires for a while.When the president of the powerful Federal Reserve Bank of New York speaks, the market listens. Given the recent run of solid employment data and a glint of inflation hitting the US economy, it's possible he could provide a more sanguine view of the US economy while confirming the Fed is on track for a December rate hike.

But of course the Washington DC bedlam and North Korea's sabre -rattling is muddying the broader landscape.

Japanese Yen

The North Korean headlines will be in focus after the Washington Post reported North Korea has successfully produced a miniaturised nuclear warhead that can fit inside its missiles, crossing a key threshold on the path to becoming a full-fledged nuclear power, US intelligence officials have concluded in a confidential assessment."

USDJPY has predictably come under pressure on YEN haven demand.

Headlines are in full churn as reports are circulating North Korea is "carefully examining" a plan to strike the U.S. Pacific territory of Guam with missiles, after U.S. President Donald Trump told the North that any threat to the United States would be met with "fire and fury".


Another washout on EURO longs after the sturdy JOLTS jobs report. While by no means a return to US dollar glory days, the Euro is feeling a bit of pressure from the strong US economic data prints. Although the Euro has been trading poorly the past few days, the dips remain relatively shallow and not overly encouraging for the US dollar bulls, as few as they may be.

Australian Dollar

The Australian dollar is trading in line with the broader USD strength.

Yesterday saw another solid NAB business conditions number keeping the Aud supported well above the key 0.7875 level. But the rally petered out at .7939 as we are starting to get lower highs on the shorter duration suggesting the .7875 could prove a magnetic level over the near term.But this is all about the USD and if we see a further extension on the US dollar correction that possibility could materialize.But in the meantime, traders look to keep powder dry until Friday, where all roads lead to the US CPI.

On a side note, given Australia's vital role in the APAC supply chain, it worth keeping an eye on the escalation of regional geopolitical risk as this could dampen sentiment quickly.