June 7 2019

June 7, 2019 (Western Union Business Solutions)  – The US economy  added lesser than expected  75k jobs in May sending the USD lower today, while  stronger than forecast Canadian hiring last month catapulted the loonie to 1 ½ month peaks against the greenback.

Canada’s economy appears to be bouncing back after a slowdown after data showed an addition of 27,700 jobs in May, a print more than three times better than forecasts of a gain of 8,000. Unemployment fell to a record low of 5.4%. Wages grew at a steady 2.6% annual clip. The news depicted a resilient economy and lowered the risk of the Bank of Canada cutting interest rates this year. Higher oil above $53 was also loonie-positive.

The dollar index crashed to late March lows after weak hiring dialed up pressure on the Fed to cut interest rates. America added only 75,000 jobs in May, a print far below forecasts of 185,000. Unemployment held at a 50-year low of 3.6%. But wage inflation moderated by a tick to 3.1%. The drop off on hiring was consistent with slower second quarter growth and offered evidence of downside risks to the economy from trade wars materializing. Today’s overall lackluster jobs report suggested a higher risk of the Fed cutting rates from 2.5% at a coming meeting with its next decision due June 19.

The euro’s more than 1% gain for the week had it on pace for its best performance of 2019. The euro capitalized on dollar weakness and an ECB decision this week that was perceived as less dovish than expected. A general lid may be fastened on the euro, however. That’s because gauges of long-term inflation expectations in the euro zone have fallen, a situation that if sustain would increase pressure on the ECB to strengthen stimulus.

 


USA