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Talking Points:

- July NFPs miss slightly at +209K, Unemployment Rate drops to 6.2%.

- US Dollar absorbs losses after ‘weaker’ data; payroll growth eclipses +200K for sixth straight month.

- EURUSD holds below $1.3400, USDJPY flirts with ¥103.00.

The July US Nonfarm Payrolls report wasn’t as good as market participants could have hoped for, but it was still a strong report. The sixth consecutive month of jobs growth above +200K, the first time since the late-1990s, underscores the underlying momentum in the US labor market.

Although the unemployment rate rose by one-tenth of one percent to 6.2%, the gain comes on the back of the labor force participation rate increasing by the same increment to 62.9%. That’s to say, more participants are entering the labor market as jobs growth remains strong. Seasonally, the July jobs data is strong: in the five years prior (2009-2013), NFPs averaged +5.4K (standard deviation of +205.9K).

After a strong run higher, the US Dollar is trading mixed around the data and US yields are eased off slightly. Here’s a look at the data:

- Change in Nonfarm Payrolls (JUL): +209K versus +215K expected, from +298K (revised higher from +2288K).

- Change in Private Payrolls (JUL): +198K versus +227K expected, from +270K (revised higher from +262K).

- Unemployment rate (JUL): 6.2% versus 6.1 % expected unch.

- Participation Rate (JUL): 62.9% from 62.8%.

See the US Dollar economic calendar for Friday, August 1, 2014.

US Dollar Eases Back as July NFPs Disappoint High Expectations

US yields have started to rise over the past week, but losses seen in the belly of the yield curve (3Y-7Y) today are supporting a modest pullback US Dollar. This flattening of the middle and long portions of the yield curve has proven to be US Dollar negative.

EURUSD 1-minute Chart: August 1, 2014 Intraday

US Dollar Eases Back as July NFPs Disappoint High Expectations

Charts Created using Marketscopeprepared by Christopher Vecchio

With US yields moving lower, the US Dollar has seen losses develop across the majors, in particular against the Euro. The EURUSD traded in a 45-pip range around the announcement, rallying from below $1.3400 to as high as $1.3433 after the announcement. After a return back below $1.3390, the pair was last seen at $1.3425.

Read more: US Dollar Breakout Nearly Confirmed - Trade Setups for July NFPs

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