The Dollar was softer ahead of the data than recent rate/yield moves might have suggested; that’s to say that the very close correlation between USD/JPY and 5-year yield differentials has broken down a bit, and the jobs data narrow that gap slightly. Likewise, EUR/USD, which has been tracking short-term rate differentials, was too high and is now too high by a smaller margin. Meh! We’re unlikely to break ranges with this.

Now the focus switches quickly to Wednesday’s CPI report, where the consensus call is for 5% core inflation. Below that, and maybe more people start wondering, not if the Fed passes up on a July hike, but if that could be the last one. And then, maybe EUR/USD does make a move through 1.10 and USD/JPY can head back towards 140. 

The Canadian data posted strong jobs growth (2.4% YoY) but a significant slowdown in wage growth to 3.9%. That’s left the market split about Wednesday’s Bank of Canada meeting. A hike keeps USD/CAD downward momentum in place.