Dollar Ends Mixed, US Bond Yields Lift on Robust Payrolls

USD/JPY Jumps to 3 Day High, Euro Edges Up, AUD Flat

Summary:

The Dollar finished mixed against its Rivals while US bond yields climbed after the US economy created 336,000 jobs in September, beating forecasts at 171,000.

A popular gauge of the Greenback’s value against a basket of 6 major currencies, the Dollar Index (DXY) finished modestly lower at 106.10. The Dollar Index initially rallied immediately following the release of the US Payrolls report before easing at the close.

Against the yield sensitive Japanese Yen, the US Dollar jumped to an overnight and 3-day high at 149.53 before easing to finish at 149.25. On Friday, the USD/JPY pair opened at 149.47.

Average Hourly Earnings in the US eased to 0.2% against forecasts of 0.3% while the September Unemployment Rate was unchanged, at 3.8%. Economists expected a Jobless rate of 3.7%.

Against the Canadian Dollar, the Greenback tumbled to 1.3650 from 1.3710 following a strong rise in Canada’s Employment of 63,800 jobs from 39,900 previously.

The Euro (EUR/USD) edged up to 1.0585 against Friday’s opening at 1.0550. Sterling (GBP/USD) settled at 1.2235, up from 1.2195. The Australian Dollar (AUD/USD) closed at 0.6385 (0.6373).

The Greenback finished modestly higher against the Asian and Emerging Market Currencies. USD/THB (Dollar-Thai Baht) rose to 37.07 from 36.93 while USD/CNH was little changed, at 7.3100.

Wall Street stocks jumped after initial weakness following the Employment data. The DOW finished up 1.02% to 33,430 (33,092) while the S&P 500 rallied 0.86% to 4,312 (4,255). Other global share markets rose. Japan’s Nikkei gained 1.03% to 31,377 (31,040).

Other economic data released Friday saw Japan’s Average Cash Earnings (y/y) ease 1.1%, against forecasts of 1.5%. Germany’s Factory Orders (m/m) climbed to 3.9%, beating estimates at 1.6%.

The UK Halifax House Price Index was at -0.4%, up from a previous -1.8%, and better than economist’s expectations at -0.8%.

USD/JPY – The Dollar Yen pair rallied to 149.25 at the close of trade in New York, up from Friday’s open at 148.80. The US 10-year bond yield climbed 9 basis points to 4.80%, boosting this Greenback against the Yen. In choppy trade, the overnight low recorded was 148.46.

EUR/USD – The Euro advanced against the Greenback to finish at 1.0585, up from Friday’s 1.0550. The shared currency rallied to an overnight peak at 1.0600 before easing in late New York. The EUR/JPY pair also advanced, settling at 157.90 (156.60).

AUD/USD – The Aussie Battler rose modestly to 0.6385 from 0.6373 on Friday. The Australian Dollar traded to an overnight high at 0.6400 before dipping at the New York close. The overnight low recorded was at 0.6312 in choppy trade.

USD/CAD – Against the Canadian Loonie, the Dollar had a choppy session following the release of both Canadian and US jobs data. The Greenback soared to an overnight high at 1.3745 before tumbling to finish at 1.3650. The overnight low traded was 1.3643.

On the Lookout:

The week ahead sees the release of the US Headline and Core CPI (Thursday, 12 October).

Today, the US and Canadian markets are closed for holidays (Canadian Thanksgiving and US Columbus Day).

Today’s economic calendar kicks off with Germany’s August Industrial Production (m/m f/c -0.1% from -0.8%; y/y no forecasts, previous was -2.1% - ACY Finlogix).

The Eurozone releases its Sentix Investor Confidence Index (f/c -24 from -21.5 previously).

Trading Perspective:

Markets now turn their focus on the US CPI report due for release later this week (early Thursday morning Sydney).

We can expect a quiet day in North America due to the 3-day weekend in Canada and the US.

Despite a mixed finish to the Dollar due mostly to technical factors, the economic data is still supportive of an increase in US interest rates.

Which will keep the Greenback bid against most of its Rivals.

However, the technical correction of the Dollar on Friday warns of more ahead.

Interesting times for traders.

USD/JPY – The stronger finish in the US treasury bond yields were supportive of this currency pair. The Dollar settled at 149.25 Japanese Yen, up from Friday’s 148.40. Immediate resistance lies at 149.55 (overnight high traded was 149.53). The next resistance level is found at 149.85 and 150.00. Immediate support can be found at 148.90, 148.50 and 148.20. Likely range today: 148.70-149.70. Look for verbal intervention from Japan Inc as we approach 150.00.EUR/USD – The Euro rallied against the US Dollar to 1.0585 from 1.0550. On the day, look for immediate resistance at 1.0600 followed by 1.0630. Immediate support lies at 1.0520, 1.0500 and 1.0470. Look for the Euro to trade in a likely range today between 1.0520 and 1.0620. Prefer to sell Euro on strength. (Source: Finlogix.com)

AUD/USD – The Australian Dollar finished modestly stronger against the Greenback to 0.6385 from 0.6373 Friday. Today, look for immediate resistance at 0.6400 followed by 0.6430. Immediate support can be found at 0.6355 followed by 0.6325. The next support level for the Aussie lies at 0.6285. Likely range today: 0.6310-0.6410 – trade the range.GBP/USD – Sterling gained versus the US Dollar to 1.2235, up from Friday’s 1.2195. Look for immediate resistance at 1.2265 (overnight high traded was 1.2261). The next resistance level is found at 1.2395. On the downside, look for immediate support at 1.2200 followed by 1.2170. Look for the British Pound to trade in a likely range today of 1.2170-1.2270. Trade the range.

Happy Monday and trading all. Have a top week ahead.

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