Can knee-jerk gains result in lasting gains?
The jump in the US dollar on the non-farm payrolls headlines is no surprise. Wage growth is a major focus of the FX market and average hourly earnings rose the most on a year-over-year basis since 2009.
The US dollar us up 30-50 pips across the board. If anything, that's a smaller move than I would have expected on the headlines. One caveat is that the jump in wages was mainly due to supervisory workers. If you strip that out and look at production and non-supervisory workers; that's only up 0.1% m/m and 2.4% y/y.
Perhaps that's a warning sign that US dollar gains will fade. I'm not sure what's going to happen today but I'm sure that if the US dollar can't extend these gains, or at least hold them into the close, then the US dollar selling is going to continue next week.