The US dollar is slumping hard following today’s non-farm payrolls report. The headline was a touch soft and revisions were negative so there’s a reason to sell the dollar. At the same time, the wage numbers were hot and that will give the Fed some indigestion as they try to bring inflation under control.
On net, I’d say that’s something of a tie, so why the big USD drop?
I think there were would-be bond buyers lurking. The +4% yields in 10s are attractive but many would have been reluctant to buy in case of a big non-farm payrolls surprise to the upside. So while there were some bond-negative details in the report, there was nothing strong enough to spook those who are reaching for yields that are more attractive than they’ve been in 15 years.
Yields are now near the lows of the day right across the curve, with 10s down to 4.15% from a high of 4.20%.
EUR/USD is up a half-cent:
EURUSD 10 mins