This is the big test for the US dollar
If the dollar can bounce today, it can soar
Scratch off any hopes for a Fed hike in June. Jobs missed estimates and the only reason the unemployment rate didn't rise is because labor force participation fell.
If there's a silver lining in the cloudy report it's that average hourly earnings rose 2.5% compared to 2.4% expected in a sign that some wage inflation has arrived, or at least it's ticked higher.
The US dollar took the news badly. The kneejerk in USD/JPY was down to 106.50 from 107.00. The general moves are 50 pips across the board but there has been no follow-through yet.
For me, the big test of a trend is how it responds to news. This week has been all about mild optimism for the US dollar bulls. This dashes the fundamental Fed angle but that doesn't mean the dollar can't climb. Seasonally it's a great month for USD and it's been beaten down since early in the year.
If this US dollar can turn around in spite of the jobs data, then I think it's back on the dollar train.
Already as I'm writing this, the commodity currencies have turned lower.