Another NFP Record & GBP/USD

NFP Review

A record 4.8 million jobs created (or re-created) in June smashed through expectations of 3 million and set up a second higher weekly close for Wall Street. The data collection factors we mentioned in yesterday’s report were reportedly again unfixed, opening the door to another big beat. The dollar initially sank but later gained as haven over fears the pace of job gains has hit a peak. 
 

USD: COVID

The US reported 50,000 new daily cases on Wednesday and by Thursday; Florida alone had reported 10,000 new cases. The new surge is causing a rethink about how quickly the US, the world’s biggest economy can recover. If business have to re-shutter in July, June’s job gains could all be given back.
 

EUR: New Proposal

EUR/USD has been stuck between 1.12 and 1.13 with the dollar attempting to breakout amid new haven appeal, while the euro’s fate hinges on the possible EU Recovery Fund. Reports on Thursday were that EU Council President Charles Michel will propose a new version next week, still at €750 billion but perhaps with a different mix of loans and grants to appeal to the ‘frugal four’ European countries.
 

GBP: British holidays

The pound has been trending up this week, despite a lack of a breakthrough in post-Brexit trade talks. The currency was bolstered today by reports the UK may drop plans for ‘air bridges’ between a handful of countries and will instead apply ‘quarantine exemptions’ to travellers to and from 70 countries to help the British tourism industry.
 

WTI > $40

Crude oil prices settled higher on Thursday with WTI closing above $40 per barrel. The gains were spurred by the blowout US jobs report and Wednesday’s surprise 7.2 million inventories draw. Oversupply issues were fixed by a combination of OPEC and financial pressure on private producers, especially in the US shale patch. The next leg up from here will need clearer data on demand recovery.

After making a new lower low on Monday, GBP/USD has picked up to the 1.25 level, making a matching high- in a first bit of evidence the downtrend since June 10 may be finishing.