FX Weekly Report (6/7/2012): Equities shed their gains following key central bank actions (page 2 of 2)

And unfortunately the release did little to improve market sentiment. The US Nonfarm payrolls for June missed expectations yet again with overall payrolls coming in at 80K, well below expectations of 100K.

Hiring in private payrolls also fell below expectations, dropping to 84K from an expected 106K. Manufacturing payrolls came in at 11K, up from an expected 7K. The overall unemployment rate was unchanged and in line with expectations at 8.2%. June's figure capped the weakest quarter of jobs growth in two years, where an average of only 75K new jobs were added each month, this well below the 226K monthly average in the first quarter of this year.

Those who fell out of the labor force increased by 34K to more than 87K, but this was not large enough to warrant any changes in the participation rate which was unchanged at 63.8%. The report, along with the ISM index for manufacturing which came in weaker earlier in the week, reinforced the fact that the US economy continues to struggle with slowing output amidst a global slowdown and this no doubt will see the debate of QE3 re-ignite in the markets once again. But the figure is not weak enough to force the Fed into introducing additional QE measures when they next convene at the end of July and as a result the US Dollar will continue to benefit. The US Dollar Index looks primed to test those June highs of 83.50 once again, with commodities and higher yielding assets remaining under pressure against the Greenback.