Why US dollar gave back all the non-farm payrolls gains

The headlines all look bullish on non-farm payrolls but when you dig into the report there are some real caveats:

1. The headline might have beat the consensus by +46K but the prior two months were revised by a combined -71K
2. Unemployment held steady at 3.7% vs 3.8% expected but labor force participation fell by 0.3 pp, meaning employment to population worsened
3. Government jobs rose by 52K, which is a big chunk of the report and doesn’t exactly point to a roaring underlying economy
4. The household survey saw 683K in job losses
5. Given the strong ADP and initial jobless claims numbers yesterday, the market was clearly leaning towards a beat.

The one data point that will give the Fed some real pause was average earnings up 0.4% vs 0.3% expected but that’s hardly the final word. Stay tuned as we get ISM services at 10 am ET; it’s one of the best forward-looking indicators.