Following the sharp EUR/USD rebound from 1.3500 lows on Thursday to a peak above 1.3650, there was inevitably unease over selling the Euro aggressively in Europe on Friday with markets wary over the risk of a further short squeeze.
There was also trepidation ahead of the latest monthly US employment data due early in the New York session given the potential for high volatility. The latest UK trade deficit was worse than expected, but the impact was very limited, especially as a large chunk of oil export revenue was missing from the data release.
EUR/USD overall drifted weaker to the 1.3625 area without making a challenge on any significant technical levels. GBP/USD maintained a robust tone as it attempted to hold above 1.6800 while USD/JPY was trapped below 102.50.
The headline US non-farm payrolls release was very close to market expectations with an increase of 217,000 for May from a revised 282,000 gain the previous month while the unemployment rate held steady at 6.3%. There was some encouraging news on earnings and weekly hours which suggested that the underlying labour market was healthy and relief that the total number of jobs in the economy has surpassed the pre-recession peak seen in 2008.
EUR/USD dipped slightly lower in an immediate reaction, but bears were unable to take control and there was a move to resistance in the 1.3670 area. Similarly, USD/JPY dipped to lows near 102.10.
The dollar found strong support at lower levels with EUR/USD reversing back to the 1.3620 area as the data was re-assessed. USD/JPY rebounded to test resistance above 102.50 as GBP/USD dipped back below 1.6800 with some dollar demand emerging into the weekend.
Although headline Canadian employment growth was slightly higher than expected for May, the unemployment rate ticked higher to 7.0% from 6.9% and the jobs breakdown was less favourable with a loss of full-time jobs. USD/CAD found support on approach to 1.0900 and rallied firmly back towards 1.0950. AUD/USD was also unable to hold above 0.9350 as commodity currencies had a slightly more defensive tone.