The shockingly disappointing non-farm payrolls growth of 88k has sent the dollar reeling. The 61k upward revisions to the Jan. and March figures and the smaller than expected trade deficit were not sufficient offsets. This is the poorest U.S. jobs growth in 9 months and threatens to repeat the pattern of the last couple of years in which a spurt in job creation is short-lived.
Investors have also become more immune to the divergence with the unemployment rate. Many now seem to appreciate that it is a better reflection of the participation rate. The unemployment rate ticked down to 7,6% from 7.7%, as almost 500k people left the labor market. If there is any good news in the report it is that the work week increased by 0.1%, which is worth several hundred thousand full time equivalents (in terms of output). Earnings, on the other hand, were disappointing; coming in flat and pushing the year-over-year rate back to 1.8%, the lowest pace since last Oct.
Canada also reported dismal employment figures. It loss 54.5k jobs, all of which were full time. The unemployment rate rose to 7.2% from 7.0%. This offsets in full the Feb jump in jobs. Separately, Canada reported a C$1 bln trade deficit. The expectation was for the first surplus in several months. The Canadian dollar has been hit in its own right and knock from the US, which has also weighed on the peso.
The euro spiked above $1.30 to almost $1.3030. Support is now seen near $1.2950. The dollar initially retreated against the yen, making a new marginal low on the day, but given market sentiment is such that good dollar buyers were seen on the pullback.