Expert Investor
Author: Mauricio Carrillo
Senior Reporter
Mauricio Carrillo

US Reported 2.5M New Jobs in May; Stocks And Dollar on The Upside

A total positive shock. Just when everybody was expecting the continuation of the collapsing in the United States labor market and the skyrocketing of the unemployment rate, the US Bureau of Labor Statistics reported a shocking significant increase in the number of jobs created in May.

Stocks and the dollar index are trading on the upside, while Euro and gold are falling steadily.

The United States reported that employment unexpectedly rose by 2.5 million in May. The unemployment rate declined to 13.3% from the 14.7% reported in April, according to data published by the Labor Department.

The data shocked markets that were prepared to get an 8 million job loss in May and an unemployment rate increase to 19.93%; the worst numbers the American union would experience since the great depression in the 1930s.

May Unemployment Data

Average weekly hours rose to 34.7 in May from 34.2 in April, also above expectations of 34.3. Labor force participation rose to a rate of 60.8% in May from the 60.2% posted in the previous month.

The negative note came with earnings: Average hourly earnings declined 1% between April and May, and it posted a year over year increase of 6.7%, well below expectations of a rise of 8.5%.

Long story short, the United States created jobs in May when everybody was expecting the worsening of the labor market, but Americans didn't make as much money as expected. Which is also normal.

So, the US employment report and its so-called Nonfarm payrolls data were really good. The reactions? The Dow jumped over 600 points after the news, and the US dollar is on the rise after eight negative sessions in a row.

After the release, Tony Bedikian, head of global markets at Citizens Bank, said to CNBC that the NFP data could mean that the US economy left the COVID-19 bottom behind.

Barring a second surge of COVID-19, the overall US economy may have turned a corner, as evidenced by the surprise job gains today, even though it still remains to be seen exactly what the new normal will look like.

Dollar Reacts Positively And Tests The 97.00 Level

DXY Daily Chart

Although it may not be the end of the dollar downtrend, today's employment report in the United States can be taken as news that Uncle Sam will not give up as easily as everybody thought, nor will the US dollar.

FXStreet analyst Yohay Elam commented about the relation between the data and dollar and equities in a recent article.

The data may have been distorted by government support, but that is not necessarily a bad thing. Stocks reacted positively while the dollar made some gains, albeit limited ones. Elam says. "Nevertheless, it seems that the inverse correlation between stocks and the dollar is becoming shaky. "Will the dollar grind higher? A lot depends on the Federal Reserve. It is also essential to note that the virus is still out there and may still raise its head.

After experiencing eight negative sessions in a row, the DXY found support at the 96.50 area, its lowest levels since March 12, and it started to recover ground to test the 97.00 square. Right now, the DXY is trading 0.20% positive at 96.95.

As a collateral effect, the EUR/USD was knocked at 1.1385, its highest level March 10 earlier this morning, and it is now trading below the 1.1300 level right after the NFP data.

Currently, EUR/USD is trading at 1.1298, which is 0.35% negative on the day. Friday would be the first negative day for the EUR/USD in the last ten days.

All eyes are now on Wall Street.

Meet The Author
Mauricio Carrillo
Mauricio Carrillo
Senior Reporter

Mauricio is a newer member of the team and a very welcome addition. He is a financial journalist and trader with over ten years of experience in stocks, Forex, commodities, and cryptocurrencies. This experience means he has an excellent understanding of the markets and current events.

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