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Upbeat medium-tier data lifted dollar bulls’ spirits in the first few hours of the New York session, but these gains were erased when Trump grabbed the mic and bashed the Fed for tightening.

This allowed the Japanese yen to reclaim the top spot as risk-off vibes lingered, leaving the higher-yielding Kiwi at the bottom of the pile.

  • Canada’s ADP non-farm employment down 10.5K in June
  • Canada’s May ADP non-farm employment revised from 2.9K to 27.8K
  • Philly Fed manufacturing index up from 19.9 to 25.7 vs. 21.6 consensus
  • U.S. initial jobless claims at 207K vs. 220K forecast, 215K previous
  • U.S. CB leading index up from 0.0% to 0.5% vs. 0.4% forecast
  • New Zealand visitor arrivals down 3.5% vs. earlier 2.4% gain
  • U.S. President Trump: Disadvantage for the U.S. to have strong dollar, higher rates
  • Trump: Gov’t work on the economy nullified by Fed tightening

Major Events/Reports:

Upbeat U.S. data

The dollar kicked off the U.S. session on a positive note, coming from a strong run earlier in the day and getting another boost from strong medium-tier data.

The Philly Fed index jumped from 19.9 to 25.7, outpacing the consensus at 21.6, to reflect improving conditions in the sector. Now this is perhaps one of the earliest glimpses into manufacturing industry performance as the index is for the current month.

In July, more firms reported price gains, boding well for consumer inflation down the line. Even though the outlook for the next six months continued to moderate, it remained positive overall. The CB leading index for June also beat expectations at 0.5% versus 0.4%, up from the earlier flat reading.

Meanwhile, the initial jobless claims report printed yet another better than expected read. The latest figure indicated 207K in first-time claimants, lower than the estimated 220K reading and the earlier 215K figure.

Apart from hitting its lowest level since 1969, this also marks its fourth weekly consecutive decline in joblessness. This reflects positive jobs momentum, keeping the Fed on track with its tightening plans.

Trump slams Fed tightening

But if there’s one guy that’s not too happy about Fed interest rate hikes, it’s the POTUS himself. In an interview with the CNBC, the Donald said that he’s “not thrilled” about the central bank increasing rates twice this year. He stated:

“I don’t like all of this work that we’re putting into the economy and then I see rates going up.”

Trump referred to his administration’s fiscal measures such as tax cuts that propelled strong growth, only to be pulled back by tightening measures. He did say that he “put a very good man in” the Fed and would let them “do what they feel is best.”

Still, U.S. markets had a mini panic attack upon realizing that the President might’ve skipped a lesson on monetary policy.

  • Dow 30 index is down 134.79 points to 25,064.50 (-0.53%)
  • S&P 500 index is down 11.13 points to 2,804.49 (-0.40%)
  • Nasdaq is down 29.15 points to 7,825.30 (-0.37%)

Bond yields also took hits as some worried that the administration might interfere with Fed action, even after the White House issued a statement on respecting the central bank’s independence.

  • 2-year yields sank 2.3 basis points to 2.5866%
  • 5-year yields fell 3.6 basis points to 2.7319%
  • 10-year yields dropped 3.1 basis points 2.8380%

Major Market Mover(s):

USD

The Greenback rallied then reversed during the session but still managed to end up mostly positive, except against the yen and the euro.

EUR/USD dipped to a low of 1.1574 then scrambled back up to 1.1679, USD/JPY turned upon hitting a high of 113.18 then hit a low of 112.05, USD/CHF tumbled from 1.0020 to a low of .9958, and AUD/USD popped up to a high of .7381.

NZD

Since risk-off moves stayed in play, the higher-yielding Kiwi found itself behind the pack while traders chased safe-havens. It didn’t help that the freshly-printed visitor arrivals report showed a 3.5% drop in June.

NZD/USD slipped to a low of .6714, NZD/JPY dropped from 76.04 to a low of 75.70, EUR/NZD bounced to 1.7265, and NZD/CHF tumbled to .6747.

JPY

The lower-yielding yen took advantage of dollar jitters and risk aversion, climbing its way to the top of the forex heap.

GBP/JPY slid to a low of 146.33, EUR/JPY tumbled from 131.17 to a low of 130.93, AUD/JPY is down to 82.59, CAD/JPY retreated to 84.85, and CHF/JPY fell to the 112.50 area.

Watch Out For:

  • 11:30 pm GMT: Japanese national core CPI (gain from 0.7% to 0.8% expected)
  • 3:00 am GMT: New Zealand credit card spending y/y (3.7% previous)
  • 4:30 am GMT: Japanese all industries activity index (flat reading expected)