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Labor Market Numbers Put the Loonie and Greenback in Focus

By:
Bob Mason
Published: Jun 5, 2020, 02:19 UTC

It's all about the U.S labor statistics later today. How's Trump going to spin this one? Perhaps more attacks on China...

US Economy

Earlier in the Day:

It was a relatively quiet day on the economic calendar this morning. The Japanese Yen was in action in the early part of the day.

The markets also responded to another surge in weekly jobless claims in the U.S that points to a dire set of numbers later today. With economists forecasting a 20% unemployment rate for the U.S in May, there’s plenty of reason to be cautious.

Away from the stats, further moves by the U.S government to ruffle Beijing’s feathers also continued to test market resilience early on.

On the positive, however, were the latest COVID-19 numbers. The number of daily new cases remain at relatively low levels, suggesting that a 2nd wave could be avoided.

Looking at the latest coronavirus numbers,

On Thursday, the number of new coronavirus cases rose by 105,318 to 6,697,763. On Wednesday, the number of new cases had risen by 121,534. The daily increase was lower than Wednesday’s rise and 112,124 new cases from the previous Thursday.

France, Germany, Italy, and Spain reported 1,009 new cases on Thursday, which was down from 1,401 new cases on Wednesday. On the previous Thursday, 5,612 new cases had been reported.

From the U.S, the total number of cases rose by 22,303 to 1,923,731 on Thursday. On Wednesday, the total number of cases had risen by 21,763. On Thursday 28th May, a total of 21,763 new cases had been reported.

For the Japanese Yen

April’s household spending figures for April were out early on in the day. Year-on-year, spending fell by 11.1%, following a 6.0% fall in March. Economists had forecast a 15.4% slide. Month-on-month, spending slid by 6.2%, following a 4.0% decline in March. Economists had forecast an 8.7% fall.

According to the Statistic Bureau,

  • Over the year, spending on clothing & footwear tumbled by 55.4%, with spending on culture & recreation sliding by 33.9%.
  • There were also declines in spending on transportation & communication (-8.1%), food (-6.6%), medical care (-2.8%), and education (-2.8%).
  • Spending on furniture & household utensils saw a more modest 1.2% decline.
  • There were increases in spending on housing (+9.0%) and fuel, light, & water charges (+7.4%), however.

The Japanese Yen moved from ¥109.167 to ¥109.161 upon release of the figures. At the time of writing, the Japanese Yen was up by 0.04% to ¥109.11 against the U.S Dollar.

Elsewhere

At the time of writing, the Aussie Dollar was down by 0.01% at $0.6941, while the Kiwi Dollar was up by 0.06% to $0.6468.

The Day Ahead:

For the EUR

It’s a relatively quiet day ahead on the economic calendar. German factory order figures for April are due out. We aren’t expecting too much influence from the numbers. We’ve moved on from April, having digested the May private sector PMIs.

Following a 15.6% tumble in March, another heavy slide is expected in April…

From elsewhere, market reaction to U.S labor market figures could test market risk appetite and the EUR.

At the time of writing, the EUR was down by 0.08% to $1.1329.

For the Pound

It’s a quiet day ahead on the economic calendar. There are no material stats due out to provide the Pound with direction.

The lack of stats will leave the Pound in the hands of Brexit and risk appetite in general.

At the time of writing, the Pound was down by 0.06% to $1.2589.

Across the Pond

It’s a particularly busy day ahead on the U.S economic calendar. Key stats May’s nonfarm payroll figures and the unemployment rate.

Another hefty slide in nonfarm payrolls is expected, with the unemployment rate forecasted to hit 20%.

Expect anything in line with or worse than forecast to spook the markets… No doubt, President Trump will also have a few things to say…

The Dollar Spot Index was up by 0.13% to 96.798 at the time of writing.

For the Loonie

It’s a relatively busy day ahead on the economic calendar. May’s employment change and unemployment rate are due out along with the Ivey PMI.

We will expect the numbers to influence the Loonie at the end of the week.

Crude oil prices and market risk sentiment will play a hand ahead of the numbers.

At the time of writing, the Loonie was down by 0.04% to C$1.3506 against the U.S Dollar.

For a look at all of today’s economic events, check out our economic calendar.

About the Author

Bob Masonauthor

With over 20 years of experience in the finance industry, Bob has been managing regional teams across Europe and Asia and focusing on analytics across both corporate and financial institutions. Currently he is covering developments relating to the financial markets, including currencies, commodities, alternative asset classes, and global equities.

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