US dollar tumbles as US payrolls print well below expectations

The US dollar maintained a downward trajectory on Friday, in response to an abysmal US payroll print.

Meanwhile, the pound is trading in a narrow range so far this morning, with GBP/EUR flat at €1.1658 and GBP/USD subdued at $1.3841. GBP/CAD is rangebound at CA$1.7355, while GBP/AUD and GBP/NZD hols steady at AU$1.8610 and NZ$1.9380 respectively.

Some upbeat German factory order figures look to be the focus today, with the euro firming following their release earlier this morning.

What’s been happening?

The US dollar selling bias remained firmly entrenched at the end of last week’s session, following the publication of the latest US non-farm payroll report.

August’s payroll figures printed well below expectations, with the US economy only adding 235,000 jobs against the 750,000 expected, with the release putting significant pressure on the US dollar as it casts doubts over when the Federal Reserve may begin its tapering process.

This pullback in the US dollar helped to bolster the euro, thanks to the strong negative correlation between the pairing, allowing the single currency to bounce back from some initial losses in the wake of a poor Eurozone retail sales reading.

At the same time, the pound struggled to attract support at the end of last week’s session, with the currency being undermined by a downwardly revised services PMI as well as reports that Boris Johnson is considering a national insurance increase to help fund the NHS.

What’s coming up?

Kicking off this week’s session was the publication of Germany’s latest factory orders release.

July’s figures reported a stronger-than-expected expansion order growth, which has offered some support to euro this morning as it bolsters confidence in the strength of the Eurozone’s largest economy.

Meanwhile, in the absence of any notable GBP data releases, the pound could struggle for direction at the start of this week, particularly amidst ongoing uncertainty over the resilience of the UK’s economic recovery.

The US dollar will be in a similar boat this week, as a lull in major US data releases will likely see the US dollar steered mostly by market sentiment, leaving USD exchange rates to wallow if a risk-on mood continues to prevail.