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EUR/USD Fails to Sustain Rally

September 2, 2016 by

EUR/USD had attempted to rally after the release of poor nonfarm payrolls but failed and is now trading below the opening level. NFP were disappointing on all fronts, be it employment growth, the unemployment rate, or wage inflation. The poor data reduces chances for a soon interest rate hike significantly.

Nonfarm payrolls grew by just 151k in August, markedly below market expectations of 180k and the previous month’s revised gain of 275k (which received a positive revision from 255k). Unemployment rate stayed at 4.9% while economists had expected a decrease to 4.8%. Average hourly earnings rose by about 0.1%, also failing to meet expectations (0.2%) and being below the July increase (0.3%). (Event A on the chart.)

US trade balance improved in July as its deficit shrank to $39.5 billion down from the revised value of $44.7 billion in June. The median forecast promised a smaller drop to $43.0 billion. (Event A on the chart.)

Factory orders rose 1.9% in July, trailing the consensus forecast of 2.1%. The June reading was revised from -1.5% to -1.8%. (Event B on the chart.)

EUR/USD as of 2016-09-02

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