Non-Farm Payrolls Disappoint Everybody – Yen and Franc Biggest

US Non-Farm Payrolls disappointed the even the economists that lowered their expectations: only 54K jobs were gained during May, around a third of what was expected after modifications. Also the unemployment rate rose more than expected, and reached 9.1%. This time, not only safe haven currencies jump, but also EUR/USD follows and temporarily breaks resistance before falling  sharply to support and back up again.

USD/CHF reached a fresh all-time low of 0.8350 on the news. USD/JPY fell strongly and touched the round number of 80 before bouncing back. These are the safe haven currencies.

With other currencies, the story is different: EUR/USD jumped above the resistance line of 1.4520 and reached 1.4530, but then fell quickly and is under 1.45 once again and bounced off support  at 1.4450.  A fresh rise sends the pair to 1.4530 once again.

.Also GBP/USD is now falling to support at 1.63 after making an initial rise.

Last updated: 13:09  GMT.

The astonishing report of a 244K job gain in April was revised to the downside, to 232K. This month we see a correction. There was hope that the mass hiring by  McDonald’s would push the report higher, but it turns out that the private sector indeed hired less, as seen by ADP.

Regarding the unemployment rate, the move isn’t so surprising, given that the survey is made at the beginning of the month. At that period, weekly jobless claims were indeed higher than now.

Contrary to previous months, the correlation between the official unemployment rate and the “real unemployment rate” has not been seen. The real unemployment rate consists of people that are too discouraged to seek a job. The figure, U-6, has dropped from 15.9% to 15.8%, still quite depressing.

At the beginning of the week, expectations stood on a gain of nearly 200K jobs. These expectations were modified as data came in. The report by ADP for the private sector was very bad: only 38K gains in May, much lower than 180K that was expected. It’s important to note that ADP and the official Non-Farm Payrolls aren’t always correlated, but this big fall made everybody think again.

Also the ISM Manufacturing PMI was rather weak, showing a significant slowdown in activity. We’ll get the purchasing managers’ index for the services sector only later today, after the NFP.  Chicago PMI, consumer confidence and factory orders also disappointed.

EUR/USD traded just under 1.45 before the release, after rising on hopes for a deal for Greece. This is in the middle of the 1.4450 to 1.4520 range. For more on EUR/USD, see the euro to dollar forecast.