For yet another month, analysts over forecasted the number of jobs created by the US economy. This time however, by 95k jobs! In the month of May, the number of jobs created was a mere 75k compared to the market's forecast for 170k. This is an abysmal number and really puts into question whether the Federal Reserve will pause in June.
In addition, given the fact that we are now entering the US mid term elections the pressure on the Fed to pause will not only be economic but political as well with many players fearing that the Fed has overshot their tightening policy. Rate hike expectations were already hovering near 50 percent and today's horrendous number will likely drive it even lower. To make things even worse, average hourly wages came in a paltry 0.1 percent, weekly hours dipped from the previous month and the already disappointing number for the month of April was revised even lower. Furthermore, it means that consumer confidence going forward could begin to slide even further impacting already slowing retail sales, which has the primary driver of economic growth. No matter which way you cut it, this is a bad number and negative for the dollar. It also paves the way for an easy move to 1.30.
