US Non-Farm payrolls disappointed on unexpected fall to 138K in May, undershooting forecast at 185K and April’s downwards-revised figure from 211K to 174K.

Unemployment fell to 4.3% in May against forecast for unchanged 4.4% figure.

Average earnings came in line with expectations at 0.2%, while Apr 0.3% release was revised to 0.2%.

May’s numbers signal that job growth slowed and previous two months figures were revised lower, suggesting that employment gains were not as strong as initially reported and jobs sector is losing momentum.

Fall in unemployment rate to 16-year low at 4.3% did not help much to offset a negative impact.

Estimations for US economy show that creation of 75 – 100K new jobs is needed to keep up with growth, while the recent numbers showed slowing in job gains as the labor sector nears full employment.

Today’s jobs data were closely watched for signals as markets are awaiting FOMC policy meeting scheduled for June 13/14. Rate hike on June meeting is widely expected, despite comments from last meeting’s minutes that showed policymakers agreed to hold off hiking rates until was evidence that growth slowdown was transitory.

However, NFP’s miss in May could affect policymakers decision in the meeting that comes in less than two weeks.

The US dollar fell across the board on disappointing jobs data in May, as markets expected more solid numbers that was also signaled by upbeat private sector jobs data, released on Thursday.

The Euro spiked to 1.1282 after data, breaking above key near-term barrier at 1.1268 and signaling an end of consolidation phase and resumption of broader uptrend.

Cable briefly spiked above 1.2900 barrier but was unable to hold gains and returned to 1.2870 zone.

The dollar suffered heavy losses against yen, falling over a hundred pips from session high at 111.70, where recovery rally stalled on approach to daily cloud top and fell back to 110.58, turning focus towards strong supports at 110.50/23.

Spot Gold benefited from weaker dollar and rallied to fresh five-week high at $1276, signaling continuation of broader uptrend from $1214 which was interrupted by $1274/59 consolidation.

Today’s close above $1276 which was also gold’s near-term target, is needed to generate bullish signal for extension towards $1300 zone.