- US November non-farm payrolls +199K vs +180K expected
- US December UMich consumer sentiment 69.4 vs 62.0 expected
- US in talks with Gulf allies on military action against Yemen Houthis -- report
- Baker Hughes US oil rig count -2
Markets:
- Gold down $26 to $2002
- WTI crude up $1.82 to $71.16
- US 10-year yields up 10.6 bps to 4.23%
- S&P 500 up 0.5% to a 52-week high
- CAD leads, NZD lags
It's often said that even if you knew the results of the non-farm payrolls report ahead of time, it would be tough to make money. That was the case today as price action was extremely volatile in the aftermath of the report.
EUR/USD dropped to 1.0725 on the headlines, in a 50-pip drop in the direction you would expect due to a surprise drop in unemployment and slightly better headline jobs and wage growth. However that was erased in minutes and it was similar elsewhere. Then the dollar heated up again and made new highs on a few fronts, though not EUR/USD where it fell just short at 1.0731 but that certainly wasn't it as the same pattern played out again over the following few hours, leaving both sides of the trade searching for answers.
The yen trade was particularly nasty as the first jump in the dollar appeared to attract those looking for exit liquidity and the pair was smashed 140 pips from the highs. A second round of bids emerged in a rally to 144.75 from 143.75 but again was beaten back into the London fix. A third round of bids eventually helped the pair to 145.00 as Treasury yields rose.
Mixed in was a UMich consumer sentiment report. The strong headline wasn't the real story though as both short and long-term inflation metrics dropped, adding to the disinflation narrative that's percolating.
US equities were slated to open softer but found bids early and that continued throughout the day as stocks posted a sixth week of gains.
The week ahead will build up to the Fed and ECB rate decisions, along with some important Treasury auctions. Have a great weekend.
