The reaction to the US non-farm payrolls report on Friday was a bit of a tough one to figure out. The dollar reacted initially as you thought it would. The kneejerk gains evaporated all before a second wave of bids helped to pull the currency up alongside higher Treasury yields as well.
That puts the dollar back in a good spot as we come into the new week. Here's a snapshot of things at the moment:
Most major currencies are little changed on the day with the greenback holding steady. Of note, USD/JPY is inching back above 140.00 and EUR/USD is threatening a potential fall back below the 1.0700 mark.
The near-term technicals for the dollar were a bit shaky towards the end of last week. However, that has now swung the other way again and back in favour of dollar bulls. Even gold is perhaps taking a look at its 100-day moving average again at around $1,939.
The bond market will continue to be a key consideration for the dollar and 10-year Treasury yields are up 2.5 bps today to 3.718% currently. That will factor more to USD/JPY price action, among other things this week.
The peculiar thing about the dollar bid on Friday was that it came despite equities performing rather well. Wall Street saw solid gains with the S&P 500 breaking to its highest since August and Nasdaq taking out is own August high to the best levels since April last year.
The mood today is more tentative but the technicals are definitely shaping up well for stocks at the moment.