The Dollar Pops Following Stronger than Expected U.S. Jobs Data

European stocks are mixed and the Euro edged lower but there appears to be no back paddling from ECB officials yet after the taper tantrum. There has been no sign yet that officials are trying to contain tapering fears and limit the broad rise in long term yields with Bundesbank President Weidmann hinting at opening the exit door Thursday evening, while Austrian central bank head Nowotny stressed that QE won’t turn into a standard and permanent monetary instrument. U.S. yields backed up at a quicker pace than their European counterparts in the wake of the stronger than expected U.S. jobs data.

The U.S. jobs report beat estimates with a 222k June payroll rise after 47k in upward revisions, and a 0.5% June surge in hours-worked with a workweek rise to 34.5, after big boosts for both back in April that lifted Q2 averages. Civilian job increased by 245K with a 361k labor force surge that left a jobless rate rise to 4.36%, and a participation rate rise to 62.8%. There were gains across the bellwether goods sector’s jobs and hours-worked data, as goods sector jobs rose 25k, with gains of 1k for factories, 16k for construction, and 8k for mining, alongside hours-worked gains of 0.2% for both factories and construction, and 0.5% for mining. The only major underperformance was in average hourly earnings, as earnings rose just 0.2% in June after a May trimming to 0.1% from 0.2%, and a 0.2% April gain.

German Industrial Production was Stronger than Expected

German industrial production stronger than expected, rising 1.2% month over month in May, much more than anticipated after the correction in orders data the previous month. Energy production remained strong, while manufacturing growth picked up after two weak month, which helped to compensate for the correction in construction production. The annual rate improved to 5.0% year over year and data confirm expectations for a strong second quarter GDP growth rate, leaving Germany on course for an ongoing robust recovery.

Canada employment improved 45.3k in June after the 54.5k rise in May. The increase is well in excess of projections. But full time employment grew only 8.1k following the 77.0k surge in May. Part time jobs rose 37.1k on the heels of a 22.3k drop in May. The unemployment rate fell to 6.5% from 6.6% in May. The participation rate edged up to 65.9 in June from 65.8 in May.