Jobs Data Not Sufficient to Impact Tapering Debate

The US employment report was closer enough to consensus as not to shed fresh light on the Fed tapering debate. The unwinding of positions that characterized yesterday's high volatile session is continuing after the jobs data. Whatever one's view was on the timing of the Fed tapering is unlikely to change based on the jobs report.

The headline net jobs growth was marginally above expected and this was offset by the 12k downward revisions to the past two months. The unemployment rate ticked up as the labor force grew. Manufacturing lost 8k jobs. It is the third consecutive month mfg has lost jobs. The labor market participation rate rose slightly and hours worked remains unchanged after April was revised to 34.5 from 34.4. 

Separately, Canada reported more impressive employment data. Jobs jumped 95k. The consensus was for 15k after April's 12.5k. Given the size of the economy,it would be as if the US added almost a million jobs. Most of the jobs Canada created (76.7k) were full time jobs. The unemployment rate slipped to 7.1% from 7.2%.

The Canadian dollar has responded well to the news. The dollar is testing CAD1.02. Important support is seen down to CAD1.0170. The euro has chopped around but mostly lower. Support is seen near $1.32 and then $1.3170. We note that the 2-year interest rate differential continues to move against the US dollar. It is at the lowest level now since Feb. The dollar spiked down to JPY95 and bounce back a bit. The 100-day moving average comes in near JPY96.30. This is the first the dollar has traded below it since last Oct.