We look for payrolls to stay strong in May following the upside surprise to a robust 253K gain in April. We also expect the unemployment rate to remain steady at 3.4%, as we are assuming job creation in the household survey will be broadly consistent with NFP. Average hourly earnings likely advanced 0.3% MoM, though the y/y measure should have stayed unchanged at a still-elevated 4.4%.

An upside surprise would likely play into recent USD strength, though with a few caveats. The USD rally would also need follow through in subsequent data, like ISM services and inflation. What’s more, the USD has overshot recent Fed repricing, while the USD’s beta to data surprises show market is getting long USDs again. As a result, we see the risk of more downside on a miss than support on a beat.