Jobs gain, wages wane

A report from the Labor Department on Friday said that the US added 222,000 jobs last month, well above forecasts around 147,000. While the private sector comprised most of the gains, government hiring gained the most in almost a year. Local governments added 35,000 jobs – the highest reading since last July. We also saw the first gain in retail since January.

Participation in the labor force rose as did the amount of hours worked, and while unemployment ticked higher it is still near 2001 lows. Yet there is one point of concern that we’re watching – wages.

Wage growth continues to lag behind job creation and hit below analyst estimates in June. Average hourly earnings showed a four cent gain in June from the month before, which works out to 0.2% month-on-month and 2.5% year-on-year.

Wages are stagnant even as hiring accelerates and joblessness remains low, creating a puzzling picture for policymakers and could prevent them from raising rates again this year as intended.

G20 gets some attention

World leaders are gathering at the G20 summit in Hamburg, Germany today. Expect tough talks on issues like trade and climate change – with a side of public dissent.

Tens of thousands of people have already taken to the streets of Hamburg. Protesting inequality in what they’re calling the “Welcome to Hell” rally, they aim to disrupt the summit and have already escalated to violence in some areas.

German Chancellor Angela Merkel set the stage last week when she announced that G20 will focus on climate change. President Trump pulled the United States out of the Paris climate deal last month, inciting objections from many world leaders.

Merkel stated last week that “the Paris agreement is irreversible and non-negotiable and I am determined to carry out the negotiations at the G20 Summit so that they can serve the Paris climate agreement.” UK Prime Minister Theresa May has also called for Trump to consider rejoining the deal. Chinese President Xi Jinping said the accord is “an important consensus” and should not be given up easily, but even with widespread support for the accord, world leaders may have a tough time convincing Trump to strike a deal.

President Trump will meet with Russian President Vladamir Putin for the first time on the sidelines of the summit. This comes at a time of rising tensions, with a US government investigation into whether Russia interfered with the US elections.

Buying everything in sight

The dollar climbed to a seven-week high Friday morning after the Bank of Japan announced another bond-buying spree.

A key facet of the BoJ’s monetary policy is controlling the yield curve – an increasingly tricky proposition as central banks around the world turn more and more hawkish. This is putting pressure on government bonds, and Japan is no exception.

To alleviate this pressure, the BoJ announced they would buy an unlimited amount of bonds yields. The bank increased their regular auction-based purchase of 5- to 10-year notes alongside a new offer to buy an unlimited amount of 10-year Japanese government bonds at a yield of 0.11%.

EURUSD: After spiking to near weekly highs, the euro lost momentum and is lower against the USD.

GBPUSD: The pound ticked lower after an overnight slump was chased up with a report showing the US added more jobs than expected in June.

AUDUSD: Aussie dollar higher against the US dollar, recovering from dovish noise from the RBA.

USDCAD: Canadian dollar managed to keep gains after the US employment report despite weaker oil prices Friday. Many are expecting the Bank of Canada to raise rates for the first time since 2010 when they meet next week.

USDJPY: Dollar enjoying another day of gains against the yen after the Bank of Japan announced plans to buy an unlimited number of government bonds.