End of News Forexlive Americas FX: Salary Surprise Pushes 10-Year Yields Above May High
- Gold up to $ 5 to $ 1,794
- Bitcoin down $ 1,172 to $ 41,949
- US 10-year yield up 3 basis points to 1.767%, its highest since 2019
- S&P 500 down 10 points to 4,686
- CAD advances, USD delays (I didn’t write that often last year)
There might be a story to tell in Friday’s trading if you like: US job gains were small, and so was the US dollar.
Unfortunately, this is not how it worked. While the US job title was weak, the unemployment rate fell to 3.9% from 4.2 and – more importantly – wage growth surprised on the upside.
The clear reading on this was in the bond market, where rates ended up 1 to 4 basis points in a steepening. Previously, they had been even higher with 10-year yields after breaking last year’s high of 1.777%.
The short-term rate market also pushed the odds of a March hike to 90% from 80% on previous data and we are now estimating almost 4 hikes this year.
Stocks flirted with fears of a rate hike, and the Nasdaq fell 1.6% at one point. He then halved that drop, but the sluggishness of pandemic names continued.
The forex market did not do what you would expect with price action elsewhere. Normally you would see the dollar rise against commodity currencies in a risk situation like today. Or if it climbs against the yen if it was at positive risk. Instead, he fell against everything shortly after the jobs report.
EUR / USD flows were probably the culprit and what could be behind this were German Bund yields close to 0%. This is bringing funds back to Europe and will be a critical level to watch next week.
The losses in USD were generally similar. Cable continued its march, rising to 1.3596 before bids on that number put the brakes on the rally. On Wednesday 1.3599 capped gains so this will be a place to watch early next week.
The USD / CAD was an interesting trade as the Canadian jobs report beat consensus again. In Canada alone, wage growth has been slower. Oil also reversed in US trade, falling more than $ 1 from the peak. Again, you might expect Loonies to sell at the end of the day, but it was the opposite, as the sell off of the USD held the pair near the 1.2633 low. There is a head and shoulders top formed in USD / CAD with the neckline just below.
Crypto was also in the spotlight as bitcoin briefly fell to $ 41,000 during the December 4 peak. That put it at the worst levels since September with a 2.7% drop. Ethereum did much worse, falling 6.2%.