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Ugly Jobs Report Sends U.S. Dollar Lower And Stocks Higher!

By Kathy LienForexMay 07, 2021 04:55PM ET
www.investing.com/analysis/ugly-jobs-report-sends-us-dollar-lower-and-stocks-higher-200578515
Ugly Jobs Report Sends U.S. Dollar Lower And Stocks Higher!
By Kathy Lien   |  May 07, 2021 04:55PM ET
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Economists and investors could not have been more wrong about today’s U.S. jobs report. The U.S. dollar traded sharply lower against all of the major currencies on the back of what can only be described as an abysmal non-farm payrolls report. Economists were looking for just under 1 million jobs and the whispered number was well above that level. To everyone’s complete surprise, only 266,000 jobs were created in the month of April. Job growth in March was revised lower as well, with the unemployment rate rising to 6.1% (it was expected to fall to 5.8%). The only good news was wage growth, which accelerated 0.7% against a forecast of zero growth.

Everyone is scratching their heads about how the jobs report could be this terrible given strong consumer confidence and sharp declines in jobless claims. Some economists are pointing to a shortage of workers – especially since construction employment was flat despite the booming housing market and pickup in residential construction. Leisure and hospitality added more than 330,000 jobs, but that increase was offset by declines in manufacturing employment and temporary help.

How could there be a lack of workers if the economy is still short 8 million jobs from its pre-pandemic level? Child-care issues and generous expanded unemployment benefits scheduled to expire in September are a big part of the problem. Many workers are reluctant to return to work, particularly in person before the school year ends. It is unclear if there will be a strong snap back in next month’s report (we think there will), but what is irrefutable is that taper has been thrown out the window. Federal Reserve Chairman Jerome Powell’s reluctance to talk taper is justified by today’s numbers. Investors sold U.S. dollars across the board, which is the reaction you’d expect such a soft release.

Stocks, on the other hand, soared as investors shrugged off the data. As Treasury Secretary Janet Yellen said after the report, we “should not take one month of data as an underlying trend.” President Joe Biden along with Yellen were quick to defend jobless benefits by saying they don’t think extended benefits are hurting employment. Ultimately, stocks are trading higher because investors know that the recovery in the U.S. economy is strong and jobs will return. This month’s numbers are a fluke. May and June data should be much better. The recovery in Treasury yields, which fell sharply after the jobs report, confirms that bond traders share this view. With that said, the weak jobs report and the rise in stocks should keep the U.S. dollar under pressure.

The Canadian labor market numbers were terrible as well, with more than 200,000 jobs lost in April. The country's unemployment rate also ticked up to 8.1% from 7.5%. Like the U.S. dollar, the Canadian dollar’s losses were limited by the underlying strength of Canada’s labor market and the prospect of a stronger recovery.

Ugly Jobs Report Sends U.S. Dollar Lower And Stocks Higher!
 

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Ugly Jobs Report Sends U.S. Dollar Lower And Stocks Higher!

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Comments (23)
Matthew Lenco
Matthew Lenco May 09, 2021 6:25PM ET
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Welfare and benefits continue to rise and people continue not wanting to work dropping out of the number of people measured by unemployment numbers. With that said it is dangerous to state we have a shortage of workers. Especially, when only 50% of the 350 million people in the US are actually willing to work.
Solomon Lalani
Solomon May 09, 2021 10:43AM ET
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Summary: 1. Bad jobs report = no chances of an interest rate hike anytime soon = bad for USD = good for US stocks (TINA). [my call: market action was just a wash-out event and will reverse]. 2. Kathy got the CAD situation wrong; there were no losses for CAD; instead, it strengthened! CAD is positively correlated to CL and will reverse when CL corrects (good level to accumulate would be from 1.2068.
Miquel Mauri
Miquel Mauri May 08, 2021 1:24PM ET
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Thanks for the article.
Kathy Lien
Kathy Lien May 08, 2021 1:24PM ET
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you are welcome!
Andres Green
Andres Green May 08, 2021 12:18PM ET
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I'd avoid using exclamation marks when writing article titles.
Andrew Allen
Andrew Allen May 08, 2021 12:18PM ET
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so much hate for good constructive criticism lol. These journalist hero worshippers are offended so easily!
Andres Green
Andres Green May 08, 2021 12:18PM ET
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lol, I was actually trying to be nice. Putting exclamation marks on titles is a terrible habit to have and won't do the author any favors.
Pete palella
Pete palella May 08, 2021 12:18PM ET
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Shut up!
Larry DeAngelis
Larry DeAngelis May 08, 2021 6:47AM ET
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The 30 year was lower by the end of the day. Explain that in your illogical thought process.
NUNO LOUREIRO
NUNO LOUREIRO May 08, 2021 6:10AM ET
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If the jobs report was strong... Stocks will go up, it's always a win, win for stocks, never saw a economy where things go permanently up, never down
Larry DeAngelis
Larry DeAngelis May 08, 2021 6:10AM ET
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The algorithms are programmed to buy if crude goes up, gold goes up, yields go down or now if The Lithuanian stock market is up 1 point. Totally garbage. No one cares about free markets anymore. They just legislate a bull market. Total garbage!
Casino Crypt
CasinoCrypt May 08, 2021 6:10AM ET
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You need to dig deep , buy you will see massive warping of the financial superstructure. Even most experts cant see some massive cracks showing deep in the world financial layers. Just give it time.
PIERA MWANIKI
PIERA MWANIKI May 08, 2021 3:59AM ET
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You can say that again"scratching heads"woooo
Mike Brarey
Mike Brarey May 08, 2021 2:41AM ET
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why Everyone keeps says that stocks went up despite the job report??? they obviously went up BECAUSE of the job report
Morne de Wet
Morne de Wet May 07, 2021 9:59PM ET
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This bubble is about to pop The US government had multiple opportunities to rectify their stuff up and just added fuel to their own burning house
Kurz Malenda
Kurz Malenda May 07, 2021 9:59PM ET
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people have been saying this since 2013. 🙄 just keep trading your plan.
Smart Leo
Smart Leo May 07, 2021 7:21PM ET
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I don't think there will be a full V, it will get cut short and it's across the world, why - lot of things changed for good, lot of trends accelerated. Lot of uncertainty still persists.
Smart Leo
Smart Leo May 07, 2021 7:21PM ET
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Everything went up may be due to short covering squeeze and usual dip buying combined with lower dollar.
Rob Banks
Rob Banks May 07, 2021 6:32PM ET
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it's a decent piece until you get to "Ultimately, stocks are trading higher because investors know that the recovery in the U.S. economy is strong and jobs will return." total nonsense from the corporate press, trying to dupe people into believing lies. the recovery is "strong" because of spending by the government and the Fed, which will come at a VERY steep cost down the road. Everyone knows it
Hengky Siat
Hengky Siat May 07, 2021 6:08PM ET
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including me scratching my head when I saw that number beat up so badly
William Bailey
William Bailey May 07, 2021 6:08PM ET
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Liars looking to print more free cash
Andrew Bevan
Andrew Bevan May 07, 2021 6:08PM ET
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And the market rallied on Bad News...
Emmanuel Merali
Emmanuel Merali May 07, 2021 6:04PM ET
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Socialism at its best… Will the world ever learn?The gap between the poor and the very rich will once more grow whilst ***the middle class.Then, everyone can be equal queuing for bread.
Joe McManus
Joe McManus May 07, 2021 6:04PM ET
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I think you are confused. Bailing out corporations is not called socialism, but capitalism.
Joe McManus
Joe McManus May 07, 2021 6:04PM ET
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I think you are confused. Bailing out of corporations and gaming the market is not socialism, it is capitalism.
Andrew Allen
Andrew Allen May 07, 2021 6:04PM ET
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capitalism does not involve the government determining who wins and loses dumdum Joe. Fascism might be a better definition, but capitalism is how the middle class grows and helps the greatest number of people
Vv Pp
Vv Pp May 07, 2021 6:04PM ET
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capitalism is for 'golden boys' wake up, I am sure you don't belong to them
Andrew Allen
Andrew Allen May 07, 2021 6:04PM ET
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You don't know sh:t, Lebowski
mohammad ali asvad
mohammad ali asvad May 07, 2021 6:00PM ET
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Hi but it's likely that the US dollar is welcomed as safe haven last week
Aa Ha
Aa Ha May 07, 2021 5:58PM ET
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Why would anyone want to work when they get paid $400 / week to do nothing?
Aleksander Dashi
Aleksander Dashi May 07, 2021 5:57PM ET
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Great article Kathy! Many thanks
Renzo Francesqui
Renzo Francesqui May 07, 2021 5:54PM ET
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Thats what happens when people dont want to work because of the unemploymeny benefits, it should be revised to help only the people whl REALLY need the support from goverment
Andrew Allen
Andrew Allen May 07, 2021 5:54PM ET
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that's just the trick isn't it? what happens if popular opinion demands the higher unemployment benefits? Are you willing to deny the mob of Democracy?
Mark Wahl
Mark Wahl May 07, 2021 5:54PM ET
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All. In. China.
Catharine Varady
Catharine Varady May 07, 2021 5:53PM ET
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i sense there should be more jobs created as economy feels much more vibrant, the number is even not close to jobs number california has created. is the figure fake to counter yellen's recent comment for keeping usd low?
Anthony Bahar
Anthony Bahar May 07, 2021 5:49PM ET
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Ifs called inflation
Steve Graham
Major_Tom May 07, 2021 5:49PM ET
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In addition to inflation, if unemployment benefits continue to outpace job salaries then there will be little desire for people to return.
Luis Angulo
Luis Angulo May 07, 2021 4:11PM ET
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If you pay for not working you get what you want
Marlon Rose
Marlon Rose May 07, 2021 3:53PM ET
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Great job!
Kathy Lien
Kathy Lien May 07, 2021 3:53PM ET
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welcome
Kathy Lien
Kathy Lien May 07, 2021 3:53PM ET
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👍
Onuigbo Ifechukwude
Onuigbo Ifechukwude May 07, 2021 3:43PM ET
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Hello
Kathy Lien
Kathy Lien May 07, 2021 3:43PM ET
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Hey
 
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