• Review and revise
  • CAD finds support
  • US jobless rate falls to pre-crisis low
  • Oil pares losses

Nonfarm payrolls beat expectations in April, confirming robust job growth in the US. While the US dollar remains indifferent to follow through on any upside moves, investors are thinking this will support expectations for the Fed to hike interest rates in June. The US added 211,000 jobs last month, above expectations for 185,000 – but is this figure here to stay? March’s already low reading of 98,000 jobs was revised even lower to 79,000. February also saw a revision, bringing the prior reading of 219,000 up to 232,000. Combined, the employment gains in February and March were 6,000 lower than previously reported. Thus, we may also see April’s gains revised next month as the numbers roll in.

Wages – the constant thorn in the side of the expanding US labor market – slipped slightly to an annual rate of 2.5%, but this was largely overshadowed by the headline gains paired with a drop in unemployment. Unemployment and underemployment both fell to the lowest levels in almost 10 years. The jobless rate fell to 4.4%, and the improvement in underemployment indicates that more US workers are shifting from part-time to full-time work.

Canadian unemployment also beat expectations, the jobless rate dropped to an 8 ½ year low of 6.5% in April. This was counterbalanced however by fewer gains in new jobs than expected. Canada added 3,200 jobs vs. the 10,000 expected, yet another miss from consensus expectations, but unlike prior months this miss surprised to the downside. Despite the mixed picture in employment, the Canadian dollar is firming against the USD after hitting 15-month highs and the economic activity surprised to the upside in April.

Oil is steadying after sinking to a six-month low, but safe havens like gold and the Japanese yen continue to benefit from the risk-off move it sparked. Saudi Arabia’s OPEC chief helped West Texas Intermediate climb back above $45 / barrel by announcing that oil producers were converging on the consensus that they need to continue to “rebalance” the market – ie. more production cuts. Oil linked currencies were mixed, with a marked recovery for the Norwegian Krone, further losses for the Russian ruble, and the Canadian dollar left flat but stable after the headlines.

EURUSD: Euro extending gains in the last trading day before French elections this weekend.

GBPUSD: Sterling higher to match weekly highs after positive PMIs yesterday and cooling European political risk.

AUDUSD:  Aussie dollar choppy this morning, but recovering with commodities to sit near daily highs against the USD.

USDCAD: CAD higher, but surprisingly not on early morning oil headlines. A drop in unemployment and expansion in economic activity driving CAD higher as North America wakes up.

USDJPY: The dollar is recovering losses against the yen as investors trade their risk-off sentiment for expectations of the next rate hike from the Fed.