The US economy has gained only 75K jobs in May, significantly below 185K that was expected. Average hourly earnings are up 0.2% month on month – also below projections for 0.3%. Year on year, wages are up only 3.1%. The unemployment rate remains at 3.6% as expected.
The US dollar is down across the board. EUR/USD has reached new two-month highs above 1.1310. GBP/USD is challenging the highs around 1.2750, USD/JPY is nearing 108.00 and AUD/USD is close to 0.70. USD/CAD is plunging at a faster clip as the Canadian jobs report beat expectations.
Here is how it looks on the EUR/USD chart:
The US Non-Farm Payrolls was projected to show an increase of 185K jobs in May after 263K in April (before revisions). Indicators leading to the report have been mixed with the ISM Non-Manufacturing PMI beating expectations with 56.9 points, but the ADP NFP showing an increase of only 27K private sector positions – the worst since March 2010.
Wages were forecast to increase by 0.3% on a monthly basis, faster than 0.2% beforehand, and repeat the 3.2% advance year on year. The unemployment rate was set to remain at 3.6% – the lowest since 1969.
The Federal Reserve will announce its rate decision later this month and markets have been projecting a higher chance of rate cuts.
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