Blow to Donald Trump as US jobs growth slows down

Andrew Cummings
June 3, 2017

US job growth slowed last month and employment gains in the prior two months were not as strong as previously reported, suggesting the labor market was losing momentum despite the unemployment rate falling to a 16-year low of 4.3 percent.

The greenback fell to seven-month lows against the euro and Swiss franc, while sliding to a two-week bottom versus the yen.

U.S. jobs growth slowed sharply last month, according to closely watched official data, dealing a blow to Donald Trump.

The ADP employment increase was substantially above consensus forecasts with a May private-sector job gain of 253,000 from a revised 174,000 increase the previous month.

Other U.S. economic data due for release Friday includes the worldwide trade report and the ISM New York report on business.

Robust jobs numbers should cement expectations of a Federal Reserve interest rate hike at its June 13-14 policy meeting. The dollar rose against all of its G-10 peers, gaining the most against the Australian dollar and the yen.

GBP/USD is supported in the range of 1.2825 levels and now trading at 1.2883 levels. British pound strengthened slightly against the dollar on Thursday as upbeat United Kingdom manufacturing data gave sterling a minimal boost as traders eyed radically conflicting polls on next week's British elections. The Markit/CIPS manufacturing purchasing managers' index (PMI) slipped to 56.7 in May from a three-year high in April. The final reading of the Eurozone manufacturing PMI was unrevised at 57.0 in May. "The Fed has been talking about this for over a year at this point and they are braced for that reality". Investors had bet a landslide victory for May would translate into a stronger hand in Britain's exit negotiations with the European Union.

The dollar was on track for its first daily gain this week, bolstered by a private payrolls survey that suggested upside risk to forecasts for Friday's all-important USA employment report.

USD/CAD is supported at 1.3463 levels and is trading at 1.3524 levels. The British Pound corrected lower having scored the largest gain in four weeks against its major counterparts in the prior session.

The other "outside market" on Friday morning finds the USA dollar index near steady. US gold futures ended the session up 0.8 percent at $1,280.20 an ounce.

The dollar slipped to a seven-month low, after data showed the pace of USA job growth in April unexpectedly fell, causing a shift in sentiment towards safe havens as investors questioned the prospect of stronger US economic growth in the second quarter.

A feature in the marketplace so far today is solidly lower crude oil prices.

In a separate report, US manufacturing activity ticked higher, hitting 53.5 in May, the Institute for Supply Management (ISM) said on Thursday. The stock draw offered some respite from worries over a global oversupply in oil.

MSCI's broadest index of Asia-Pacific shares outside Japan .MIAPJ0000PUS ticked up 0.1 percent, while Japan's Nikkei .N225 gained 1 percent to top the psychologically important 20,000-point level for the first time since August 2015. The currency traded in the range of C$1.3469 to C$1.3516.

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