Dollar weaken after Nonfarms Report

The U.S. dollar was trending lower against majors as the country's unemployment report revealed another decrease in payrolls for May.

U.S. nonfarm payrolls declined for the fifth straight month, falling by a total of 49k jobs, according to the Bureau of Labor Statistics on Friday. The real story was that the unemployment rate soared up five-tenths to 5.5% in the month, the highest rate since 2004 and the biggest monthly jump since 1986.

"Bonds rallied and the [U.S.] dollar sold off on the release of a 49,000 decline in May payroll employment," confirmed Handelsbanken FX strategist Steven Ricchiuto in an e-mail to clients. "These data points imply a weak May personal income report and a modest set back in industrial production. These data points imply a weak May personal income report and a modest set back in industrial production."

The U.S. dollar was up 0.01 to 105.95 against the yen and up 0.0019 to 1.0198 against the Canadian dollar, but off session highs in both cases. The euro was up 0.0066 to 1.5659 while the pound sterling was up 0.0014 to 1.9598, both against the U.S. dollar. The Australian dollar was up 0.0008 to 0.9595 against the greenback.

The USD and Canadian dollar were experiencing a session of choppy trading as the Canadian employment report came out on Friday as well, reporting a jump in part-time employment, which provided Canada with a net gain of 8,400 jobs in May. Canada's unemployment rate stayed steady at 6.1%

"USD/CAD generated an overnight pullback to 1.0163 before market reaction to the Canadian employment data caused a return above 1.0200," wrote RBC Capital Markets chief technical analyst George Davis. "With the hourly studies finally moving from overbought to more neutral levels, support at 1.0177 and 1.0126 is expected to attract short-term buying interest for a test of initial resistance at 1.0238".

USD/JPY 0.01 to 105.95.
EUR/USD up 0.0066 to 1.5659.
GBP/USD up 0.0014 to 1.9598.
USD/CAD up 0.0019 to 1.0198.
AUD/USD up 0.0008 to 0.9595.

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