The U.S. Dollar is down this morning as in the midst of reaction to the Employment Situation figures that were released revealing some of the worst labor sector numbers since 1939.
Overview
The economy shed 20.5MM jobs, the unemployment rate spiked to 14.7% and Average Hourly Earnings went up, indicating that there was a tremendous loss of service low-skilled work. Indeed, the situation is awful since this data only captures the impact up to the week of April 12th and we know there has been more damage in recent weeks as temporary layoffs became permanent in many cases. The greenback’s strength is certainly being questioned and this increases the likelihood of further fiscal and monetary aid.
Analysts and investors alike are uncomfortable with this type of historic moment, with grim numbers that even if somewhat expected are still a shock to see manifest. At the time of writing, jobs figures for Canada were also looking to shed about 2MM jobs in April. Thus far, we are not seeing dramatic FX flows, but that could easily change as the narrative takes hold of markets once the ring bells. We hope this is the worst payrolls report we ever get to see.
What to Watch Today…
- No major events schedule for today
Complete Economic Calendar can be found here.
EUR
The Euro got back some of its value before the week comes to a close after Germany’s supreme court decision to have the European Central Bank review its QE program and fix in the next three months produced a rather strong defense from the monetary policy officials. ECB President Christine Lagarde joined the head of the International Monetary Fund Kristalina Georgieva in a Bloomberg event where she stated that her mandate is undeterred and that Germany must get that the ECB functions to serve all under the EU Parliament, not each nation’s interest.
Much like her predecessor Mario Draghi, Lagarde is embracing her role as staunch defendant of the EU’s mechanisms and goals. We must see economic recovery to back any appreciation in the shared currency, but it is interesting to see Lagarde may become another source of faith in the bloc and its tender.
AUD
With commodities markets in the green with gold being the exception, the resource-based currency environment is mounting a comeback rally. China’s return to active production and evidence of importing at an expanding rate have aided the much-squeezed economies of Oceania while also translating into positive momentum for oil this improving petro-currencies. We shall see how long this last, but there seems to be a belief in easing measures globally aiding in preventing a worse collapse while re-opening gives hope that the worst is behind us. We will monitor how long that sentiment remains.
