Disappointing Jobs Data Sends the Dollar Lower

| 6 August 2010 08:45

Private sector pay roles gained a disappointing 71k and the June figure was revised lower. The headline lost 131k and here too downward revisions in prior months. The work week increased and hourly earnings ticked up. Manufacturing, education and health services grew jobs. The service sector lost jobs for the second consecutive month and construction lost jobs. State and local governments lost 48k jobs, while federal government jobs (census) lost 154k. The implications are the report is mixed. On one hand, the overall labor picture, which includes the downward revisions, will excite those that expect the Fed to renew asset purchases to support the economy. This has seen the US 2-year yield fall to new record lows, for example. On the other hand, the details were somewhat more supportive. The larger than expected increase in mfg employment and the longer work week suggests industrial output increased. Income rose and this may help support expectations for a recovery in retail sales. Initial support for the dollar is seen near JPY84.80-JPY85.00. The euro faces resistance in the $1.3240-60 area. Sterling may retest the $1.60 area.

avatar About Marc Chandler

Marc Chandler joined Brown Brothers Harriman in October 2005 as the global head of currency strategy. Previously he was the chief currency strategist for HSBC Bank USA and Mellon Bank. In addition to frequently providing insight into the developments of the day to newspapers and news wires, Chandler's essays have been published in the Financial Times, Barron's, Euromoney, Corporate Finance, and Foreign Affairs. Marc appears often on business television and is a regular guest on CNBC.

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