US dollar: forecast for July 6-12
Mixed labor market data on Thursday capped the US Dollar growth. May Non-farm payrolls came out at 223K – this is solid result. Unemployment fell to 5.3% - this is the lowest level since 2008. However, wage growth and labor participation rate disappointed to the downside.
All in all the employment figures still leave a September rate hike on the table. However, the Fed still needs to see the June data to confirm a positive trend. The Greek drama remains a “dark horse” for the market. Further negative developments in Greece will likely postpone the Fed’s rate hike expectations. According to the CME data, the futures market reflects only a 12% rate hike chance for September and a 49% chance for December.
However, the picture could change dramatically after the FOMC meeting minutes release on Wednesday, July 8. We could get some bullish surprises out of there. You should also watch the US non-manufacturing PMI and trade balance on the new week.