USD recovers on the back of the NFP report


The US dollar caps a fairly decent week as the currency continues recovering from a slump caused two weeks ago by market turmoil. While the hike in September in the US is far from certain, market sees it at least as a probability, even though the Chinese woes did not stop.
The US dollar had been seen as the last crucial release ahead of the FOMC meeting later this month. While the headline figure was rather weak, the report as a whole - revisions for July/June, wage dynamics, unemployment rate -  looked actually quite solid and reinforced the view that the FOMC may at least consider increasing rates later this month.

While the data was upbeat, it did not help market moods. Markets would not be happy about the rate increase as they are still under influence from negative events from China, as we were reminded by a soft Hong Kong’s PMI today. Speaking about soft data, do not miss a nasty output meeting from Sweden, just a day after Riksbank said it was ready to act more if required.

Looking ahead investors may hope for an easy Monday as the US&Canada are on holiday but the week as a whole should be intense. This is because of the fresh data from China - keep an eye especially on trade balance (Tuesday) and central bank decisions - both RBNZ and Bank of Canada (both Wednesday) are on the fence with cuts being a possibility.