Markets are still digesting how the hot US jobs report last week will have an impact on the FOMC meeting next month. After running with the idea of a more hawkish Fed on Friday, we are seeing some of that luster fade. Fed funds futures are still siding with heightened odds of a 75 bps rate hike, still seen ~68%. That is up from around ~42% on Friday before the NFP.
But the dollar is seen giving back some of its gains today alongside Treasury yields. 10-year yields are down 4 bps on the day to 2.79%, once again keeping below its 100-day moving average at 2.86%. Meanwhile, the greenback is seen slightly lower against the euro, pound, franc, and loonie while the aussie and kiwi are holding modest gains against the dollar today.
EUR/USD is still somewhat caught in a consolidation phase, so the continued pivot in and around 1.0200 isn't really hinting at much:
Meanwhile, GBP/USD is seeing a decent rebound after nearing a test of 1.2000 again at the end of last week. The pair is up 0.3% to 1.2105 now but topside resistance is seen further away at the trendline resistance around 1.2245 and that will be a key level to watch with support at 1.2000 the downside level to be wary of:
Elsewhere, AUD/USD has more or less erased its post-NFP drop already as outlined here with the help of more positive risk appetite on the day. But it is still early in the week to be jumping to any conclusions. The US CPI data on Wednesday will offer another round of key convictions for markets to trade on, so we're going to have to wait and see on that.
