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Dollar up more than 1% against yen as Japan stocks rally

The dollar rose more than 1% against the yen on Monday as Japanese stocks led a rally in Asian markets, boosted by a robust U.S. jobs report and hopes for additional economic stimulus in Japan.

USD/JPY hit highs of 101.95 and was last at 101.91, up 1.3% for the day. The pair had fallen to lows of 99.97 in the wake of Friday’s jobs report.

EUR/JPY advanced 1.22% to 112.43.

Japan’s Nikkei surged 3.6% after Prime Minister Shinzo Abe’s ruling coalition increased its majority in the upper house in parliamentary elections on Sunday.

The win for Abe’s coalition fed hopes for a fresh package of stimulus measures to spur economic growth.

Risk appetite had already been boosted after data on Friday showing that the U.S. economy added 287,000 jobs in June, well above the 175,000 jobs forecast by economists.

The stronger than expected jobs report indicated that the economic recovery is back on track.

But the data did little to alter the view that the Federal Reserve will stick to cautious plans for hiking interest rates after May’s payrolls figure was revised down to 11,000, the smallest monthly increase since 2010.

The euro edged lower against the dollar, with EUR/USD slipping 0.2% to 1.1027, not far from Friday’s two-week lows of 1.1001.

The pound also slid lower, with GBP/USD easing 0.15% to 1.2933, not far from its post-Brexit low of 1.2794 set last Wednesday.

Investors were looking ahead to the outcome of the upcoming Bank of England meeting later in the week.

The BoE could potentially ease monetary policy to cushion the U.K. economy from the impact of Brexit, which would also pressure sterling lower.

The U.S. dollar index, which measures the greenback’s strength against a trade-weighted basket of six major currencies, was up 0.32% at 96.62.



Fed Labor Market Conditions Remain in Negative For 6th Mth in June

Conditions in the US labor market improved in June, data showed on Monday, but remained in negative territory for the sixth consecutive month, coming in worse than expected.

The indicator, designed to illustrate expansion and contraction of labor market conditions, booked minus 1.9 during the sixth month of the year, compared to the up-revised figure of minus 3.6 snatched in May.

It hasn't booked a positive reading since December last year.

Economic desks had expected an improvement to 0.0 in June.

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US NFIB small business optimism index June 94.5 vs 93.9 exp

US NFIB  June small business optimism index 12 July 2016

Data out a few moments ago. Not a price changer but adds to the general US picture.

The National Federation of Independent Business (NFIB) Small Business Optimism Index is a composite of ten seasonally adjusted components. It provides a indication of the health of small businesses in the U.S., which account of roughly 50% of the nation's private workforce.

US June import prices 0.2% vs. 0.5% estimate

YoY -4.8% vs. -4.6% estimate. Ex food and fuel YoY -1.7% in June

The US import prices came in at 0.2% for the month of June.  This comes after a 1.4% increase in the prior month. However, YoY the price of imported goods are still down -4.8%.  This is up from -5.0% last month but lower than the -4.8% estimate.  Of course the data is still working off the sharp fall in energy going back a year.  

The reaction in the market to the data is limited (USDJPY is down about 10 pips so far.  

Other details from the report:
  • import prices ex-fuel fell 0.3% after rising 0.3% in May
  • industrial supplies prices rose 2.1% after rising 6.2% in May
  • capital goods prices fell 0.3% after no change in May
  • auto prices unchanged\thi
  • consumer goods prices fell -0.2% after rising 0.2% in May
  • export prices rose 0.8% after rising 1.2% in May. Ex agricultural rose 0.5%
  • import prices ex-food and fuel fell 1.7% year on year in June

US June PPI +0.3% y/y vs 0.0% y/y expected


  • Prior was -0.1% y/y
  • Prices up 0.5% m/m vs 0.3% exp

Ex food and energy

  • +1.3% y/y vs +1.0% exp
  • +0.4% m/m vs +0.1% exp
The PPI estimates missed badly but, ultimately, it's proven tough for producers to pass costs onto consumers with wages stagnant.

US weekly initial jobless claims 254K vs. 265K est.

Last week initially reported at 254K.

The continuing claims came in at 2149K vs 2130K est. They were 2117K last week (revised from 2124K)

US June industrial production +0.6% m/m vs +0.2% m/m expected

US industrial data

  • Prior production was -0.4% m/m (revised to -0.3%)
  • Capacity utilization 75.4% vs 75.1% prior
  • Manufacturing production +0.4% vs +0.3% exp
  • Prior manufacturing production was -0.4% (revised to -0.3%)

More good news for the US dollar and the US economy.


Turkish coup bid crumbles as crowds answer call to streets, Erdogan returns

An attempted Turkish military coup appeared to crumble on Saturday after crowds answered President Tayyip Erdogan's call to take to the streets to support him and dozens of rebel soldiers abandoned their tanks in the main city of Istanbul.

At least 60 people were killed in violence that erupted on Friday after a faction of the armed forces attempted to seize power, officials said.

A successful overthrow of Erdogan, who has ruled Turkey since 2003, would have marked one of the biggest shifts in the Middle East in years, transforming one of the most important U.S. allies while war rages on its border. A failed coup attempt could still destabilize a pivotal country.

Erdogan, who had been holidaying on the southwest coast when the coup was launched, flew into Istanbul before dawn on Saturday and was shown on TV among a crowd of supporters outside Ataturk Airport.

The uprising was an "act of treason", and those responsible would pay a heavy price, he told reporters at a hastily arranged news conference. Arrests of officers were under way and it would go higher up the ranks, culminating in the cleansing of the military, he said.

Addressing a crowd of thousands of flag-waving supporters at the airport later, Erdogan said the government remained at the helm, although disturbances continued in Ankara.

However, in an emailed statement from the Turkish military General Staff's media office address, the pro-coup faction said it was determinedly still fighting.

Calling itself the Peace at Home Movement, the faction also called on people to stay indoors for their own safety.

Rebel soldiers who had taken control of military aircraft were still firing from the air and fighter jets had been scrambled to intercept them, Prime Minister Binali Yildirim said, underscoring the ongoing uncertainty.

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NAHB July US housing market index 59 vs 60 expected

Housing data from the National Association of Home Builders

  • Prior was 60
  • Single family homes 63 vs 64
  • Prospective buyers 45 vs 46
  • Sales over the next six months 66 vs 69

US housing starts for June 1189K vs 1166K estimate

US building permits  1153K vs. 1150K estimate

The high water mark over the last year has been 1.213K for housing starts.  The low 1073K.

The prior month was revised to 1135k from 1164K reported earlier. The Building permits stayed the same at 1136K.  Both housing starts and building permits are on a annualized basis.

  • Multifamily housing starts rise 5.4% to 411,000
  • Single-family starts rise 4.4% to 778,111
  • Completions rose 1147K in June from 1021K the prior month. SIngle familiy completions rose to 752K while multifamily rose to 395K
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