RationalFX: The dollar fell against the euro and pound on Friday afternoon after softer than expected employment numbers.
Despite forecasts of 650,000, US Non-Farm payrolls (NFP) only hit 559,000 in May, rising from 278,000 in April. Non-farm payrolls cover the 80% of the US workforce employed in manufacturing, construction and goods.
Many analysts expected a significant NFP rebound to show a recovery from April. The higher expectations were aided by Thursday’s initial jobless claims and ADP non-farm employment figures exceeding market expectations. This hinted to investors that Friday’s NFP result could be a strong one.
This has likely done little to alter the Federal Reserve’s current monetary policy stance. The Fed has vowed to support the economy for as long as possible and to keep interest rates lower for even longer. Focus will now turn to this Thursday’s US inflation data. A strong number should boost the dollar while a weak number could dent it further as investors use the data to gauge the Fed’s next policy move.
In slight contrast to the NFP, the unemployment rate was a touch better than forecasts of 5.9%, reading 5.8%. This is the first time the unemployment rate fell below 6% since the pandemic began. However, labour force participation also declined suggesting hesitancy remains among some Americans around returning to work.
Source : ETFWorld.co.uk