08.06.2018 / 07:34

US Nonfarm Payroll Numbers Below Consensus Estimates

The U.S. dollar saw subdued trading action on Friday, struggling for a clear direction, following the July jobs report. The ICE U.S. Dollar Index which measures the greenback against six rivals, traded in a narrow band near its levels from Thursday, both ahead of and after the morning’s economic data. The gauge was last little changed in negative territory at 95.136, on track for a 0.5% gain for the week. The broader WSJ Dollar Index was down 0.2% at 88.69.

Nonfarm-payroll numbers came in below consensus estimates at 157,000, compared with 195,000 expected by economists. The unemployment rate ticked down to 3.9% from 4%, in line with expectations, and yearly hourly wages were unchanged. Separately, the July ISM nonmanufacturing index also missed consensus forecasts, coming in at 55.7. A reading of at least 50 indicates expansion. Otherwise, trade tensions were at the center of attention. On Friday China said they would retaliate with tariffs on $60 billion on U.S. goods. Earlier in the week, it was reported that the U.S. could raise tariffs on some $200 billion in Chinese goods to up to 25% from 10% previously announced.

Meanwhile, the People’s Bank of China announced it will require a reserve ratio of 20% on currency forwards. During the Asian trading day, China’s offshore traded yuan which moved a bit more freely compared with trading in Beijing, weakened against the dollar to a level not seen since December 2016. One buck bought 6.9129 yuan at Friday’s peak, since then retreating to 6.8451, down 0.5% on the day. China’s onshore traded currency was more level, with one dollar buying 6.8538, down 0.1% from Thursday, according to FactSet. Although talk of yuan devaluation has been rampant in the face of trade tensions this week, the onshore yuan only weakened 0.3% versus the dollar this week. In the year, however, it is down 5.1%, according to FactSet.