Dollar Holds Gains After Mixed January Jobs Report
A Bloomberg gauge of the dollar whipsawed after the release of mixed January jobs data that affirmed expectations the Federal Reserve will hold interest rates steady in the months ahead. The loonie rallied to the day’s high after concurrent Canada labor figures came in hotter than expected.
Bloomberg Dollar Spot Index gains 0.1% after briefly plunging to day’s low.
Headline NFP was 143k vs. 175k expected, with prior revised higher to 307k and the unemployment rate dipping to 4%.
Treasury’s 10-year yield rises some 5.8bp to 4.49%.
“Fires in California and extreme snow on the beaches of Florida still couldn’t provide the downside surprise this market was expecting, which we got in the headline but not the rest,” said Jordan Rochester, head of FICC strategy at Mizuho.
Loonie erases losses and reaches day’s high after Canada jobs data beats expectations.
USD/CAD slips less than 0.1% to 1.4300 level, earlier rose as much as 0.3% ahead of labor figures.
Net change in Canada employment in January was 76k vs. 25k expected.
“The data in Canada was quite strong which is why we are seeing domestic rates underperform,” said Sarah Ying, head of FX strategy at CIBC Capital Markets. “We are seeing early greenshoots in Canada from rate cuts already delivered”.
USD/JPY rises 0.3% to 151.85, paring gains after US data but set to snap a four-day drop
Pair remains down 2.1% this week, as faster-than-expected wage growth and hawkish comments from Bank of Japan officials fueled speculation that the central bank may raise interest rates sooner than markets anticipated.
Demand for yen topside remains in play this week; hedge funds rollover USD/JPY exposure into CHF/JPY down to relative cheapness at the front-end of the curve, Europe-based traders say.
Knock-in options and put spreads are favorite expressions of yen-bullish bias.
EUR/USD whipsaws and then holds losses after US data, falls 0.1% to 1.0370.
European Central Bank will scrutinize economic data when deciding how far to lower borrowing costs, and won’t spend too much time thinking about the so-called neutral rate that’s often touted as a guiding star, Chief Economist Philip Lane said.
Source : Bloomberg
