Shock in Employment Situation Hurts U.S. Dollar

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The U.S. Dollar is losing ground this morning based on surprisingly poor data in the release of the Employment situation.

Overview

Non-farm Payrolls came in at just 75K when 175K was expected. Additionally, Average Hourly Earnings for May showed slack with a reading of just 0.2% growth although the forecast was low at 0.3%. These numbers only solidify what we learned earlier in the week: The Fed sees the economy a bit stagnant and interest rate cuts could be the cure. Naturally, the buck is dipping, but we shall see if indeed the hit to the currency will be permanent.

Now that there is clarity in regards to the economy slowing since the evidence has come out, we need to hope that trade developments can change the tide. Private Payrolls registered at just 90K when 174K was expected and the Labor Force Participation is low at 62.8%.

The greenback could use a break from being so high and perhaps our forecast for dollar weakness in the second half of the year will manifest.

What to Watch Today…

  • No major events scheduled for today.

Complete Economic Calendar can be found here.

EUR

The Euro is up while getting mixed news about its economic reality. Yesterday’s European Central Bank meeting showed how sensitive the currency is to monetary policy as it swung within a wide range when the statement came out, during the press conference that made the announcement less hawkish, and afterwards.

ECB President Mario Draghi explained that several members of the committee had brought up seeing the need to cut rates, which prevented Euro from truly climbing much higher since the first announcement stated that rates would stay the same until the first half of 2020.

Nevertheless, caution is needed with the economy as Germany’s Industrial Production contracted once again by (-1.8%). Clearly, the biggest economy of the bloc will struggle to see good GDP figures with months of ongoing negativity. Euro still managed to reach its best level in two months thus far.  
 

CAD

The Canadian Dollar is up 1.6% thus far in June following better economic numbers and renewed hopes of improving trade relations by ratifying the implementation of the USMCA agreement, which followed the NAFTA trade pact revamp last year

While negative numbers in the U.S. translated into some appreciation, the “Loonie” is also rising on domestic merit. Canada’s Unemployment Rate is at a 43-year low at 5.4%. If oil prices go towards $60.0/barrel, the surge could continue.

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