NEW YORK- The dollar fell after US nonfarm payrolls data showed hiring increased in May as the pandemic eased, but not as much as expected, tempering expectations the Federal Reserve will tighten monetary policy sooner, rather than later.
Nonfarm payrolls increased by a solid 559,000 jobs last month, helped by higher COVID-19 vaccination rates, but that was below the consensus forecast for 650,000 jobs added in May.
“This payroll number was a little disappointing,” said Edward Moya, a senior market analyst at OANDA.
The softer-than-expected report means there is no urgency for the Fed to begin tapering its monthly purchase of $120 billion in bonds to support the economy, he said.
“Bad news about the economy is good news for an ultra-accommodative Fed, which is going to keep the dollar on the ropes,” Moya said.
Despite May’s gain, nonfarm payrolls remained 5 percent, or 7.6 million jobs, below their pre-crisis level, Jocelyn Paquet, an economist at the National Bank of Canada, said in a client note.
“There is, therefore, still a long way to go for the labor market,” she said.
Foreign exchange strategists in a Reuters poll were almost evenly split on the dollar’s near-term direction following two months of broad weakness, as they await clearer signs from policymakers. — Reuters
