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US equities finished the last trading session of the week with heavy losses, between 1.05% and 2.47%. Positive US jobs report further cemented the case for a US Federal Reserve rate hike of 50 bps in the June meeting, despite worries that the US central bank could cause a recession.
Economic Data
The US Nonfarm Payrolls for May, showed that the economy added 390K new jobs, far more than the 318K estimated. Financial analysts’ chatter about the US labor market still supports the view that the US Federal Reserve will tighten aggressively after receiving the green light.
The Institute for Supply Management (ISM) unveiled that the Non-Manufacturing PMI increased by 55.9, lower than the 56.4 expected. It shows businesses’ resilience, after last week’s Q1 GDP contraction of 1.5%, according to the second estimate from the Bureau of Economic Analysis.
The oil and gas rig count, an early indicator of future output, were flat at 727 in the week to June 3, Baker Hughes Co said in its closely followed report on Friday. The energy services firm said that puts the total rig count up 271, or 59%, over this time last year. US oil rigs were steady at 574 this week, while gas rigs held at their highest since September 2019 at 151. Even though the total rig count has climbed for a record 22 months in a row through May, weekly increases have mostly been in single digits and oil production is still below pre-pandemic levels.
Other Developments
US President Joe Biden ignores Elon Musk’s fears about the US economy by pointing to latest investments made by the electric-carmaker’s competitors. Biden also took an indifferent situation at Musk saying “Lots of luck on his trip to the moon”. Biden, on Friday, warmly praised some of Musk’s competitors for expanding their investments in electric vehicles. The president had been asked about Musk after a speech in Delaware touting the solid jobs report released earlier Friday. The Labor Department said that the US economy added 390,000 jobs in May, better than expected, while the unemployment rate held at the low level of 3.6%.
The EUR/USD remains downward biased, despite the major reaching a fresh weekly high at 1.0787. The Relative Strength Index (RSI), in bullish territory, begins to drift lower. Hence, the EUR/USD might consolidate between the 1.0627-1.0787 range before resuming downwards.
May’s US Nonfarm Payrolls crushed expectations and further cemented the case of an aggressive Fed. The USD/CAD edges up during the New York session, though earlier seesawed between minimal gains/losses of 0.01-0.03%, but remains above the weekly low of 1.2551, amidst investors’ risk-off mood. At 1.2572, the USD/CAD remains steady after the Bank of Canada’s (BoC) 50 bps rate hike earlier in the week.
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