How the dollar reacts will be telling

The US dollar jumped 50-70 pips across the board after July non-farm payrolls were released. The numbers were unambiguously good. Net jobs were strong, wages were strong, revisions solid. You can always pick a few holes, but they were small ones.

Now what we have is an experiment in seeing how the US dollar reacts to good news. If it can't extend on the gains, or even hold them, then it's a negative signal. A market that can't rally on good news is probably going lower.

I think a lot of people are pulling for the US dollar here because if the data turns higher, the Fed gets hawkish again and Congress figures it out, then we could be talking about a massive rally but the trade that usually happens is the one that hurts people the most, and dollar weakness fits the bill.