Markets:
- Gold flat at $1940
- US 10-year yields up 8.8 bps to 4.18%
- WTI crude oil up $2.25 to $85.88
- S&P 500 up 0.1%
- USD leads, CAD lags
The preliminary market response to the non-farm payrolls report was about what you’d count on — USD promoting, bonds bid — however then it bought difficult. The preliminary strikes reversed and bonds bought off, resulting in a powerful bid within the US greenback. The strikes grew more and more aggressive with USD/JPY slumping to 144.45 then hovering to 146.16 — practically 180 pips.
The greenback roared elsewhere as nicely with EUR/USD tumbling to ranges simply above the August lows. That worn out what had been a promising rally this week for the euro bulls.
Cable rose to 1.2713 on the US jobs report then dropped 1.2580 earlier than buying and selling sideways into the US lengthy weekend.
The one forex with a comparatively easy transfer was CAD as a poor GDP report sank the loonie initially after which USD power did the remaining. The outcome was a 90-pip rise in USD/CAD to 1.3600, additionally wiping out some respectable progress that had been made earlier within the week.
The massive query left to reply is: Why the sudden leap in bond yields on what was a dovish jobs report? Some pointed to modest power within the ISM survey together with the power worth rise however that is hardly compelling. Different discuss facilities round fee lock promoting and I am unable to assist however surprise if Chinese language bond sellers have been in search of liquidity. There is not a simple reply and the lengthy weekend together with the flip of the calendar have been additionally cited.
The dearth of a transparent rationalization places the US greenback rally on a shaky basis. We’ll should type it out subsequent week — benefit from the weekend.