North American Summary and Highlights 5 June
Overview - The USD advanced across the board on strong US employment data. Canadian employment also exceeded expectations.
North American session
May’s US non-farm payroll was significantly stronger than expected with a rise of 172k, with 93k in upward back month revisions. May’s upside surprise came from a 55k rise in local government and a 70k rise in leisure and hospitality, possibly in preparation for the World Cup. Unchanged unemployment of 4.3% and a 0.3% rise in average hourly earnings were as expected, though also suggesting a healthy labor market. Increased risk of Fed tightening lifted UST yields and saw equities lower, despite oil being down on the day.
USD/JPY bounced above 160 peaking at 160.33 before correcting below 160.20. EUR/USD plunged to 1.1525 from 1.1645. EUR/JPY fell to near 185 from above 186 but EUR/GBP and EUR/CHF moves were modest. USD/CAD focused more on the US data, rising to 1.3950 from 1.3880 but AUD/CAD fell to .9825 from .99 as AUD/USD fell almost a big figure below .7050.
European session
Trapped in familiar ranges ahead of US payrolls on a quiet morning. If anything, slight bias in recent sessions for Europe to be seeing glass half full and US more half empty when it comes to Iran backdrop, and the USD lean.
Crude holding flat to -1% over session. USD/JPY sat off 160, EUR/USD lifted slightly into mid 1.16-1.1650 zone. Higher beta pairing holding up despite the fact that tech markets have been showing some tiredness the last few sessions (Kospi -5.5%, Nasdaq future -1%, metals -1%-2%).
EZ Q1 GDP revised to -0.2%q/q from 0.1%, 0.3%y/y from 0.8% - downward distorted by sharp Irish GDP drop (GNP firmer), though breakdown is still soft all the same. Italy retail sales flat m/m, 1.6%y/y unadj. UK Halifax house prices -0.1%m/m, 0.5%y/y.