Major jobs miss emboldens Fed doves Major jobs miss emboldens Fed doves Major jobs miss emboldens Fed doves

Major jobs miss emboldens Fed doves

Macro 4 minutes to read
Michael O’Neill

FX Trader,

Summary:  Today's US jobs print marks a major confirmation of the macro slowdown narrative, and investors should expect calls for Federal Reserve stimulus to escalate in number and volume.

US nonfarm payrolls rose a disappointing 75,000 in May, well below the consensus for an increase of 185,000 jobs. Average hourly earnings were a tad weaker than expected, rising 3.1% compared to the 3.2% forecast.

Interest rate doves loved it. On Monday, St. Louis Federal Reserve president James Bullard became the first Federal Open Market Committee voting member to speak openly about the need to cut interest rates on risks to domestic economic growth from rising trade tensions.  The next day, Fed chair Jerome Powell said they were closely monitoring the implications of the trade negotiations for US economic growth. He didn’t say anything about cutting rates, but the similarity of his and Bullard’s concerns have rate cut doves cooing up a storm.

That will make President Trump happy. He has been berating Powell and the Fed for months because of its tight monetary policy; yesterday, he repeated his claim that Dow Jones Industrial Average would be 10,000 points higher.

EURUSD spiked to 1.1325 from 1.1261 while USDJPY plunged to 107.89 from 108.49.

USDCAD broke below major support at 1.3322 following the US employment data and another robust domestic employment report. Canada added 27,700 jobs in May while the unemployment rate slipped to 5.4% from 5.7%. For USDCAD bears, the currency is firing on all cylinders. The combination of strong Canadian data, soft US data, US rate cut fever and a rebound in crude oil prices are weighing on prices. The USDCAD technicals are bearish following the break of 1.3322 (the 50% Fibonacci retracement of the October/December 2018 range) which targets the 61.5% Fibonacci level of 1.3116 and the 76.4% level of 1.2990.  

The week ahead is heavy on data and very light on central bank monetary policy meetings. Nevertheless, as has been the case for the past few months, the US and China trade dispute will dominate trading. There are a lot of Chinese data on tap including trade, Inflation and Retail Sales which if weaker than expected, will reinforce fears of a global economic slowdown. China is expected to release its list of “unreliable” foreign entities which could spark another shift into safe-haven currencies.

President Trump ignited risk-aversion concerns with his threat to impose 5% tariffs on Mexico, effective Monday. Mexico is trying to avert Washington's wrath by deploying Mexican military troops to the Guatemalan border to prevent illegal immigrants from crossing.

Traders looking for Fed rate cuts will be looking for weaker than expected US inflation and Retail Sales data, due Wednesday, and Friday, respectively.
USDCAD (daily, source: Saxo Bank)
USDCAD (daily, source: Saxo Bank)

Saxo Capital Markets (Australia) Limited prepares and distributes information/research produced within the Saxo Bank Group for informational purposes only. In addition to the disclaimer below, if any general advice is provided, such advice does not take into account your individual objectives, financial situation or needs. You should consider the appropriateness of trading any financial instrument as trading can result in losses that exceed your initial investment. Please refer to our Analysis Disclaimer, and our Financial Services Guide and Product Disclosure Statement. All legal documentation and disclaimers can be found at

The Saxo Bank Group entities each provide execution-only service. Access and use of Saxo News & Research and any Saxo Bank Group website are subject to (i) the Terms of Use; (ii) the full Disclaimer; and (iii) the Risk Warning in addition (where relevant) to the terms governing the use of the website of a member of the Saxo Bank Group.

Saxo News & Research is provided for informational purposes, does not contain (and should not be construed as containing) financial, investment, tax or trading advice or advice of any sort offered, recommended or endorsed by Saxo Bank Group and should not be construed as a record of our trading prices, or as an offer, incentive or solicitation for the subscription, sale or purchase in any financial instrument. No representation or warranty is given as to the accuracy or completeness of this information. All trading or investments you make must be pursuant to your own unprompted and informed self-directed decision. No Saxo Bank Group entity shall be liable for any losses that you may sustain as a result of any investment decision made in reliance on information on Saxo News & Research.

To the extent that any content is construed as investment research, such content was not intended to and has not been prepared in accordance with legal requirements designed to promote the independence of investment research and as such, would be considered as a marketing communication.

None of the information contained here constitutes an offer to purchase or sell a financial instrument, or to make any investments.Saxo Capital Markets does not take into account your personal investment objectives or financial situation and makes no representation and assumes no liability as to the accuracy or completeness of the information nor for any loss arising from any investment made in reliance of this presentation. Any opinions made are subject to change and may be personal to the author. These may not necessarily reflect the opinion of Saxo Capital Markets or its affiliates.

Please read our disclaimers:
- Full Disclaimer (
- Analysis Disclaimer (
- Notification on Non-Independent Investment Research (

Saxo Capital Markets (Australia) Limited
Suite 1, Level 14, 9 Castlereagh St
Sydney NSW 2000

Contact Saxo

Select region


The Saxo trading platform has received numerous awards and recognition. For details of these awards and information on awards visit

Saxo Capital Markets (Australia) Limited ABN 32 110 128 286 AFSL 280372 (‘Saxo’ or ‘Saxo Capital Markets’) is a wholly owned subsidiary of Saxo Bank A/S, headquartered in Denmark. Please refer to our General Business Terms, Financial Services Guide, Product Disclosure Statement and Target Market Determination to consider whether acquiring or continuing to hold financial products is suitable for you, prior to opening an account and investing in a financial product.

Trading in financial instruments carries various risks, and is not suitable for all investors. Please seek expert advice, and always ensure that you fully understand these risks before trading. Saxo Capital Markets does not provide ‘personal’ financial product advice, any information available on this website is ‘general’ in nature and for informational purposes only. Saxo Capital Markets does not take into account an individual’s needs, objectives or financial situation. The Target Market Determination should assist you in determining whether any of the products or services we offer are likely to be consistent with your objectives, financial situation and needs.

Apple, iPad and iPhone are trademarks of Apple Inc., registered in the US and other countries. AppStore is a service mark of Apple Inc.

The information or the products and services referred to on this website may be accessed worldwide, however is only intended for distribution to and use by recipients located in countries where such use does not constitute a violation of applicable legislation or regulations. Products and Services offered on this website is not intended for residents of the United States and Japan.

Please click here to view our full disclaimer.