- US November non-farm payrolls +263K vs +200K expected
- Canada November employment change 10.1K vs 5.0K estimate
- Poland formally agrees to $60 Russian oil price cap with review mechanism
- Freeport LNG now says it will restart initial production around year-end
- Fed's Evans: We are on a path to get financial conditions appropriately restrictive
- Timiraos: Strong jobs report keeps the Fed on track to hike by 50 bps
- Fed's Barkin: Labor supply looks like it will remain constrained
- ECB's de Guindos: We are seeing that inflation is starting to slow down
- ECB's de Guindos: November inflation data has been good news
- Gold down $5 to $1797
- WTI crude oil down 99-cents to $80.22
- US 10-year yields down 2.4 bps to 3.50%
- S&P 500 down 10 points to 4072
- JPY leads, CAD lags
The US dollar was soft all week in the lead-up to non-farm payrolls and that was particularly true of USD/JPY in the hours before the release as the pair touched 133.64 early in Europe. With a strong bid in bonds, the market is seeing a Fed peak or creeping economic weakness.
So naturally non-farm payrolls were strong and the latest batch of dollar bears was stung by a quick roughly 150 pips US dollar rally across the board. The main headlines on jobs and wages were strong with hourly avg hours up 0.6% compared to 0.3% expected.
Then it all came slowly undone. People began to pick holes in the wages story with hours worked ticking lower. Then they looked closer a the household survey and noted another decline and a flat trend since March:
The result was a slow give-back of all the US dollar gains. That left the euro and pound largely unchanged on the day with USD/JPY down a full cent.
Helping the move was a relentless long-end led bid in bonds for the second day. US 30s fell 9 bps to 3.54% from a high of 3.70% shortly after the jobs report.
The Canadian dollar also had a jobs report to deal with and it was upbeat with a 50K increase in full time jobs. That makes next week's BOC meeting a bit more intriguing with the market 76% priced for 25 bps but with the remainder on 50 bps. The loonie underperformed but that was on a reversal in oil prices with the OPEC+ meeting on Sunday looming and the G7 oil price cap set to go into effect on Monday.