02 June 2017 at 12:38 GMT
US May Jobs report was an ugly one: this one was ugly virtually across the board, as the payrolls change headline (+136k vs. +182k expected) combined with net revisions (-66k) mean a more than -100k miss to overall expectations and and the average hourly earnings limped lower, matching recent lows at +2.5% year-on-year. All around uninspiring and though it may not affect whether the Fed hikes at the June 14 FOMC meeting, they will have to sound very flexible on their guidance.
Even the drop in the unemployment rate to 4.3% was on the bad news that the participation rate dropped -0.2% to 62.7%, the lowest in five months.
For confirmation that the US dollar may weaken further on this, we are watching US yields as the low for the cycle in the 10-year comes into view around 2.16%. A drop below here could see USDJPY in particular challenging lower, especially if this is accompanied by a bit of risk off in equity markets.