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The recent US Non-Farm Payrolls showed a 217K gain in jobs in May — expectations were around 214K jobs. The unemployment rate remained unchanged at 6.3%, while it was predicted to inch up to  6.4%. This report showed numbers, which were  inline with market expectations and thus the report currently has  a modest impact  on the USD. The initial numbers for April showed a strong gain of 288K and a low unemployment rate of 6.3%.

Markets were trading quietly towards the event: Before the publication, EUR/USD traded around 1.3645,  GBP/USD: 1.6824, USD/JPY: 102.40, AUD/USD: 0.9334,  and USD/CAD: 1.0921 . The US dollar slid down  across the board with EUR/USD rise to  1.3655, GBP/USD above  1.6825  and USD/JPY falls  to 102.37.

Data (updated)

  • Non-Farm Payrolls:  +217K  (exp. +214K.  April 288K)
  • Participation Rate: 62.8%  (62.8% last month )
  • Unemployment Rate: 6.3%  , (exp. 6.4%, April: 6.3% before revisions)
  • Revisions:  -6K (+36K last month)
  • Private Sector NFP:  +216K  (ADP showed a gain of +179K jobs).
  • Real Unemployment Rate (U-6):  12.2%  (previous: 12.3%).
  • Employment to population ratio:  58.9%  (previous: 58.9%)
  • Average Hourly Earnings: +0.2%–  (exp. +0.2%, April: 0%).
  • Average  workweek:  unchanged at 34.5  (last month: 34.5).

Market reaction and Analysis

Normal market reaction  were expected from most currencies. The yen usually provides the most straightforward reaction to the numbers: the headline NFP and the digestion of the participation rate, etc.

One currency stands out: the euro. The common currency is still under the influence of yesterday’s rate decision: the ECB announced a broad range of steps but also closed the door on more cuts. EUR/USD fell sharply only to recover strongly.

The  NF payroll report was close to market expectations; this news is currently pulling slightly up  the EUR/ USD.

This news, however, still shows the U.S labor market is slowly recovering, which is the kind of progress Yellen and the FOMC want to see and could influence their decisions regarding  the Fed’s future plans.

For  analysis on gold, oil and other commodities, see Trading NRG.

Background

May is the second full month without weather disruptions. After a very strong bounce in April, more moderate rises were likely. The lower expectations were probably lowered due to the unimpressive ADP number and also after the employment component of the services PMI advanced from last month, but remained in slow growth territory.

All in all, this publication is unlikely to derail the Fed’s taper train. QE tapering is expected to end in October. Nevertheless, the release always has an effect on the dollar, whereas a strong number is USD positive and a weak one is negative.

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