Non-Farm Payrolls dropped on Friday and the figures were nowhere near predictions. The consensus for May was 185k but the actual number vastly surpassed it at 272k new jobs. The unemployment rate also unexpectedly increased from 3.9% to 4%. The data are in almost complete opposition to the ADP employment change, which were released a couple of days prior, showing fewer new jobs than initially predicted. NFPs have a history of undergoing significant revisions over the months following publication, worth keeping an eye on future corrections to these figures down the line.
A heating US labour market does not bode well for rate cuts, as testified by the reaction seen in the greenback. The DXY climbed 0.81% on Friday, finishing the day just shy of 105. Last week the ECB lowered its interest rate target, the first major central bank to do so. Should the Federal Reserve not follow suit and maintain the current high rate, the difference may potentially weigh on the Euro.
Metals took the news badly, gold plummeting 3.45% as the threat of a stronger Dollar reared its head. Indices were relatively unaffected on Friday, perhaps caught between a visibly strong economy the prospect of higher rates for longer. Very little on the economic calendar early in the week but Wednesday brings us CPI and inflation data, before the Fed announces its interest rate decision. No change heavily priced in but the accompanying press conference may offer some indication of how the board perceived the surprise jobs numbers.
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