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Marc Chandler, Global Head of Currency Strategy at BBH, notes that the US jobs data was stronger than expected and yet the impact on the dollar is modest.    

Key Quotes

“The market is as confident of a hike at the June 13 FOMC meeting as it gets about these kinds of things.”

The US created 223k net new jobs.    This is the strongest since the outsized 324k increase in February and follows two soft reports (135k in March and 159k in April).”

“The unemployment rate unexpectedly ticked down to a new cyclical low of 3.8% from 3.9%.   This was partly the result of a decline in the participation rate of 62.7% from 62.8%.   The underemployment rate slipped to 7.6% from 7.8%.”

“Average hourly earnings rose 0.3%, a bit more than expected, but after the 0.1% increase in April, the long-run average of 0.2% increase a month remains intact.   Hourly earnings have risen by 2.7% year-over-year. Of course, the earnings increase is not equally distributed.”

“The technical indicators suggest that after a sharp advance in May, the US dollar is likely to consolidate and correct lower against most of the major currencies in the coming days, with the possible exception of the Japanese yen, and to a less extent the Swiss franc.    The inability of the dollar to rally after the employment data lends credence to this view.”