May 7 2016

May 6, 2016 (Tempus, Inc.) – The Canadian dollar has lost over half a percent against the U.S. dollar in early trading following disappointing Canadian jobs data.  Canada’s employment declined by 2,100 jobs in April, failing to meet expectations of a gain of 1K. The unemployment rate held at 7.1%, according to Statistics Canada.

A fall in manufacturing jobs (a loss of 16,500) was unable to make up for a rise in retail jobs. The Canadian dollar has lost 3.0% against its American counterpart this week as the price of oil struggle to hold gains from the week prior.

USA 

May 5, 2016 (Tempus, Inc.) – The Japanese Yen strengthened further as a result of pessimism across global markets. The safe-haven currency is now 13.0% stronger in 2016. This is worrying Minister of Finance Taro Aso, who spoke over the weekend about the need to consider intervention in the FX market.

He said it was “extremely concerning” that last week JPY experienced a five-yen move in a matter of only two days last week. Aso added that this was “clearly a one-sided speculative move” and that under the G-20 agreement a response to this kind of wild swing would be appropriate.

Meanwhile, Bank of Japan Governor Haruhiko Kuroda said monetary policy is currently focused on price stability and not on the exchange rate. The U.S. complained last week that Japan and China are not doing enough to monitor FX and accused them of unfair practices.

May 6, 2016 (Tempus, Inc.) – The U.S. Dollar is fluctuating in mixed direction, moving up and down rapidly as markets react to the disappointing Employment Situation data this morning. The Non-Farm Payrolls figure came in under the expected 200K reading with only 160K added jobs in April. Unemployment rose to 5.0% and private sector hiring was revised downward from March while also underwhelming last month. As it turned out, the ADP Report from Wednesday was a good indicator of loss of momentum in the labor market. The April numbers represent the slowest level of labor growth in seven months.

Although the pace of jobs added to the economy may be slowing down, Hourly earnings are a bright spot in the employment figures. Average Hourly Earnings climbed 0.3% from the previous month after a 0.2% gain for April. Wages are growing at an avg. yearly rate of 2.0% since mid-2009 as worker pay for the last year has increased by 2.5%. The Fed has highlighted the need for growth in income in order to see a much-needed boost in consumer spending. More spending means higher inflation and perhaps the slowdown in payrolls may not be as significant as the improvements to what workers are taking home. The U.S. Dollar is holding on to its gains from earlier this week thus far.

St. Louis Fed President FOMC voting member James Bullard spoke yesterday saying “my attitude about June is that it’s a live meeting, in which we will have plenty of new data compared to March…our options are open at this point.” The greenback’s rally this week occurred in line with a selloff in equities and that’s why traders have odds of a June hike at just 10.0%. We will see how hawkish officials sound in the next weeks ahead because uncertainty in global markets may not bode well for the Fed rate outlook.