ROBERT LYNCH : US nonfarm payrolls rise 117K in July, better than the median forecast and following upward revisions 56K in upward revisions to the previous two months. The unemployment rate fell to 9.1% from 9.2%, better than the “flat” reading expected but due to a decline in the workforce, which essentially counters any good news associated with the actual decline in the rate.
Markets will find some relief in the headline payrolls number but this type of employment growth is hardly consistent with an improving economy. And the boost it has given to risk appetite in the immediate aftermath of the report may well prove fleeting. If that is the case, EUR/USD gains will be sold into, as will USD/JPY and USD/CHF gains.
HSBC Global Research