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The US economy gained only 18K jobs in June 2011. Bad news. Expectations stood on a rise of about 100K jobs. The unemployment rate remained also disappointed with a rise to 9.2%, . The initial reaction is a stronger dollar against the euro and a weaker one against the yen. The euro recovered quickly. Update:the dollar is retreating against the majors but gaining ground against the commodity currencies.

This is an extremely disappointing report, that shows that the US economy has stalled. The figure for May was revised to the downside: a gain of only 25K, less than half of 54K that were initially reported. All in all, the past two months were worryingly flat.

EUR/USD broke above resistance at 1.4282 and marched forward to 1.4333. It is still far from the next resistance line that capped it overnight: 1.4375. The moves are very choppy.

It seems that the biggest loser is CAD/JPY, which is currently down more than 120 pips: from nearly 85 to 83.73 at the time of writing. The Aussie is now retreating as well, and NZD/USD is almost unchanged.

USD/JPY is down from 81.40 to 80.80 on the bad news. USD/CHF is way down from 0.85 to 0.8410. The safe haven currencies rise on the fears of global slowdown. EUR/USD dropped to 1.42 but is now recovering. GBP/USD is on the rise now as well.

The real unemployment rate, U-6 is significantly  higher: from 15.8% to 16.2%. This also weighs on the greenback and triggers thoughts of QE3. Will Bernanke hint about QE3 at Jackson Hole? The chances are still low.

Expectations rose towards the release. As detailed in the NFP Preview, there were a few positive signs for the optimism: a rise in manufacturing PMI, a rise in the employment component of the services PMI, strong job gains in the private sector (according to ADP) and stable weekly jobless claims.

The slow rise in jobs reported last month came after a few impressing months, and showed a significant slowdown in the US economy.

EUR/USD was at around 1.4250 before the release, between the 1.4220 and 1.4282 lines. USD/JPY was at around 81.40. GBP/USD was lower at around 1.5950. USD/CHF moved higher to just under 0.85. AUD/USD retreated from resistance to 1.0765. USD/CAD was capped by 0.96. Earlier, Canadian employment figures were better than expected.

It is important to remember that the initial reaction to the release of the Non-Farm Payrolls isn’t always the true direction. See other characteristics of this special event in the 5 notes for Non-Farm Payrolls trading.