Despite headwinds from layoffs in the oil patch and strikes at ports and refiners the US turned in another stellar month of job growth, posting a gain of 295K way above the top of the 200-250 sweet spot. Meanwhile, despite the loss of high paying oil and gas jobs, average hourly earnings growth held 2.0% indicating resilience in wages as well.
Today’s trade numbers, meanwhile, remind us that the US is a net importer to the tune of $40B per month so while exporters and multinationals are impacted by a rising greenback, a number of Americans benefit from a higher USD as well.
The Canadian trade balance was worse than expected which could be explained by the impact of a lower loonie on import prices and lower energy prices on export totals. CAD has come down against USD but its decline has been similar to GBP, NZD, and CHF, so the street reaction hasn’t been too negative. The next major data announcement for Canada is the employment report next Friday.
The street has taken this news as keeping the pressure on the Fed to start raising interest rates in June. USD is rallying again today, building on yesterday’s breakout and mowing down everything in its path, particularly gold and silver plus continental currencies like EUR and NOK heading into Monday’s kickoff to the ECB’s QE asset purchase program.
The prospects for a more hawkish Fed, particularly relative to the ECB continues to play out this morning with US indices
like the Dow and the S&P in retreat while the Dax has broken out to another new all-time high.
Crude oil is mixed today with WTI down slightly and Brent up slightly. Energy stocks and currencies could be active right through the day with the weekly update on drilling activity due early this afternoon.
Staples $0.31 vs street $0.30
The Fed announced that all 31 banks covered in its latest round of stress tests passed in a severe scenario.
Economic reports released overnight and this morning include:
US nonfarm payrolls 195K vs street 235K previous revised down
to 239K from 257K
US private payrolls 288K vs street 225K previous revised down
to 237K from 267K
US unemployment rate 5.5% vs street 5.6%
US participation rate 62.8% vs previous 62.9%
US underemployment rate 11.0% vs previous 11.3%
US average hourly earnings 2.0% vs street 2.1%
US trade balance ($41.8B) vs street ($41.2B)
Canada trade balance ($2.4B) vs street ($1.0B)
BoE/GfK UK inflation forecast 1.9% vs previous 2.5%
Eurozone GDP 0.9% as expected
Germany industrial production 0.9% vs street (0.2%)
Spain industrial output 0.4% vs street (0.3%)
Norway industrial production (0.4%) vs previous 3.5%
Economic reports due later today include:
1:00 pm EST US Baker Hughes drill rig count previous 1,267
TBA weekend China trade balance street $5.8B vs previous $60.0B