The details of the report show non-farm payrolls revised slightly higher in May from 69k to 77k and private sector payroll growth slowing to 84k from 105k the previous month. The unemployment rate remained unchanged at 8.2 percent but the U-6 unemployment rate increased to 14.9 from 14.8%. The only good news was average hourly earnings, which increased to 0.3 from 0.2 percent and average weekly hours, which rose to 34.5 from 34.4.
While the U.S. dollar weakened against the Japanese Yen, it soared against the euro, British pound and other high beta currencies. Investors are clearly interpreting today’s NFP report to be negative risk. The main takeaway from this week’s monetary policy meetings and economic data is that global growth will remain very weak in the third and fourth quarters. When the Federal Reserve last met, Bernanke pledged to provide additional stimulus if the U.S. economy slowed further and come August, they will be looking for the Bernanke to deliver on this pledge.
We expect for further losses in USD/JPY but additional EUR/USD weakness week will hinge upon the moves in Spanish bond yields and on the aggressiveness of the ECB vs. the Federal Reserve.
Meanwhile Canada also released employment numbers this morning and like the U.S. NFP report, job growth remained virtually unchanged. A total of 7.3k Canadians found new work last month, which helped to drive the unemployment rate down to 7.2 from 7.3 percent. What made the Canadian report slightly better than the U.S. report was the change in labor market dynamics. The details of the report showed an increase of 29.3k in full time employment and a decrease of 22k in part time employment.