USD, CAD flows: USD gains on employment report, CAD stronger still
USD gains on employment data look unreliable given downward revisions. CAD to sustain marginal rise.
The May rise in US employment is slightly on the strong side of consensus at 139k, but the last two months have been revised down substantially by a total of 95k, so from an employment perspective the data is net slightly soft. However, average earnings rose a larger than expected 0.4%, 3.9% y/y, so in total the report is broadly neutral. The USD has moved up modestly on the numbers, but we doubt there will be any sustained gain given the revisions, so the initial move may well be reversed by the end of the session.
The Canadian report is slightly stronger than expected, with the 8.8k rise better than the consensus of an 11.9k decline, and will be seen as stronger still with full time employment up 57.7k. But the unemployment rate still rose to 7.0% so the numbers can’t be seen as objectively strong. Still, the CAD has outperformed with USD/CAD slightly lower while the USD is generally higher elsewhere. The CAD will likely hold onto its gains against the USD, but cross gains should be more modest by the end of the day.