Robust payrolls report lifts Dollar, yields climb

USD/JPY extends gains, Euro, GBP, AUD tumble

Summary

The US economy created a total of 199,000 jobs in October from 150,000 previously and beating median forecasts of 180,000. Unemployment fell with the Jobless Rate down to 3.7% from 3.9%. Average Hourly Earnings also beat estimates, up to 0.4% from 0.3%.

The Greenback’s rally was broad based as US yields climbed. The benchmark 10-year Bond yield rose to 4.23% from 4.13%. Two-year US rates soared 14 basis points to 4.72%.

The Dollar Index (DXY), which measures the value of the Greenback against a basket of six major currencies lifted to 103.95 from Friday’s open at 103.55.

Against the Japanese Yen, the US Dollar (USD/JPY) extended its gains to finish at 145.00 in late New York (143.50 Friday). In another volatile session, the USD/JPY pair traded to a high at 145.22 while the overnight low recorded was 142.49.

The Euro (EUR/USD) fell to 1.0762 from Friday’s opening at 1.0800. In choppy trade, the Euro saw a low at 1.0723 before rebounding. Sterling (GBP/USD) slid to 1.2548 (1.2595 Friday).

The Australian Dollar (AUD/USD) tumbled to 0.6575 from 0.6605 while the Kiwi (NZD/USD) slumped to 0.6120 (0.6177 Friday). Australia’s 10-year bond yield fell to 4.29% (4.34%) in contrast to its US counterpart.

The Greenback finished higher against the Asian and Emerging Market Currencies. USD/CNH rallied to 7.1835 against 7.1650. The US Dollar jumped to 35.5 Thai Baht (USD/THB) from Friday’s 35.15.

Global Stocks edged higher. The DOW climbed to 36,223 (36,120) while the S&P 500 closed at 4,603 from 4,587 Friday. Australia’s ASX 200 finished up 0.76% to 7,210 (7,155).

Other data released Friday saw the US Michigan December Preliminary Consumer Sentiment climb to 69.4 from 61.3 previously, beating estimates at 62.0. China’s CPI (y/y) eased to -0.5% against -0.2% previously and expectations at -0.2%. Chinese PPI (y/y) was also lower to -3% from -2.6% previously.

USD/JPY – The Dollar Yen pair finished at 145.00 from 143.50 Friday. In another roller coaster session, the Greenback plummeted to an overnight low at 142.49 Yen. The US Dollar rebounded to an overnight peak at 145.22 before settling.

EUR/USD – The shared currency slid against the overall stronger Greenback to finish at 1.0762 against Friday’s opening at 1.0800. The overnight high traded was also 1.0800. The overnight low for the Euro was 1.0723.

AUD/USD – The Aussie Battler finished lower against the US Dollar to 0.6575 in late New York, from Friday’s open at 0.6605. The overnight low traded for the Australian Dollar was at 0.6558. The AUD/USD pair saw an overnight high at 0.6620.

GBP/USD – Sterling slid against the Greenback to close at 1.2548 (1.2595 open). The British currency was pounded to an overnight low at 1.2502. The overnight high traded for the GBP/USD pair was at 1.2601.

On the lookout

This week’s economic calendar starts off with a light data release today but picks up particularly to the end of the week.

Japan starts with its BSI Large Manufacturing Index (q/q f/c 1.1% from 5.4% - ACY Finlogix). Japan also releases its November Machine Tool Orders (y/y is f/c -12% from -20.6% - ACY Finlogix).

Tomorrow (Tuesday, 12 Dec) the UK releases its Employment report. On Wednesday (13 Dec) the US releases its November CPI and PPI data.

The Fed FOMC holds its meeting and press conference early Thursday morning (Sydney, 14 December).

The Swiss National Bank, European Central Bank and Bank of England hold their monetary policy meeting and rate announcements.

Friday sees the release of China’s Industrial Production, Retail Sales, and Fixed Asset Investment while the Eurozone and European countries release their Flash Manufacturing and Services PMIs.

The US rounds the busy week with its Flash Manufacturing and Services as well as Industrial Production and Capacity Utilization.

Trading perspective

The robust US Payrolls report resulted in higher yields and a stronger Greenback.

While the economy is growing, inflation in the US has slowed from its red-hot pace in Q3.

With a busy economic data calendar ahead, expect the Greenback to consolidate its gains today.

USD/JPY – The Dollar rebounded against the Yen in choppy trade to 145.00 in late New York. On the day, look for immediate resistance at 145.20 (overnight high traded was 145.22). The next resistance level is found at 145.50 and 145.80. Immediate support lies at 144.50, 144.00 and 143.50. Look for another choppy trading day in the USD/JPY, likely between 143.70-145.30. Trade the range, the preference is to sell rallies.

EUR/USD – The shared currency retreated against the overall stronger Dollar to 1.0762. Look for immediate support at 1.0730 (overnight low traded was 1.0723). The next support level lies at 1.0700 followed by 1.0670. Immediate resistance can be found at 1.0800 (overnight high traded was 1.0801). The next resistance level lies at 1.0840 and 1.0880. Look for consolidation, likely between 1.0710-1.0810 today. Prefer to sell rallies.

(Source: Finlogix.com)

AUD/USD – The Aussie Dollar tumbled to 0.6575 from 0.6605 weighed by broad-based US Dollar strength. Immediate support today lies at 0.6550 (overnight low traded was 0.6558). The next support level is found at 0.6520 and 0.6490. Look for immediate resistance at 0.6600, 0.6640 and 0.6680. Look for a likely trading range today of 0.6540-0.6640. Looking to sell rallies.

GBP/USD – Sterling slid against the stronger Dollar to 1.2548 from Friday’s open at 1.2595. On the day, look for immediate support at 1.2510 followed by 1.2480. Immediate resistance can be found at 1.2580, followed by 1.2610 and 1.2640. Look for further choppy trade in this currency pair, likely between 1.2480-1.2610. Preference is to sell Sterling on strength.