USD holding on to weekly gains despite of weaker than expected NFP numbers

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.

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