A 390K increase in Nonfarm Payrolls (NFP) marked another robust labour market outcome in the US in May. Will this data change the outlook for policy? Probably not, so economists at TD Securities would not expect this to be a game-changer for FX markets.
The better the data, the more difficult that a pause or reduced pace of tightening later this year becomes
“Payrolls rose a still robust 390K in May. The unemployment rate stayed unchanged at 3.6% for a second consecutive month. Average hourly earnings remained steady at 0.3% MoM, but they continued to fall on a YoY basis.”
“This report will do little to change the price action in the FX space, but it does mean that the better the data, the more difficult the proposition of slowing down the pace of hikes later this year becomes. What it does do however is at a minimum delay or even dent the premature prevailing bias to sell dollars.”