After Strong NFP Report, Dollar Strengthens and 10-Year Yields Surge to 1.6

After Strong NFP Report, Dollar Strengthens and 10-Year Yields Surge to 1.6

The dollar continued to rise early in the US session following the release of a much stronger-than-expected nonfarm payroll report. The yield on the 10-year bond also rose sharply and is now over 1.6 again. The dollar is currently the second strongest in a week, behind only the oil-backed Canadian dollar. Although the Swiss franc and the yen are trying to recover against other currencies, in particular against commodity currencies, both of them still post the worst results in a week.

The number of people employed in the non-agricultural sector of the United States in February rose by 379 thousand, well above expectations of 148 thousand. The previous month’s figure was also sharply revised from 49 thousand to 166 thousand. Overall, total non-farm employment continued to decline by -9.5 million, or -6.2%, compared to the pre-pandemic level in February 2020.

The unemployment rate fell to 6.2% from 6.3%, better than expected at 6.4%. average hourly earnings rose 0.2% MoM, in line with expectations. The labor force participation rate remained at 61.4%. The US trade deficit widened to -68.2 billion US dollars in January against expectations of -67.5 billion US dollars. Canada’s trade surplus was C $ 1.4 billion against expectations of C $ 1.4 billion.
US Dollar Index (DXY) Hits 2021 High, Rises Past 92.00
The index remained at 92.00 on Friday after the US nonfarm employment index largely beat forecasts in February. The economy added 379,000 jobs and increased the previous print volume to 166,000.

After the First Reaction, the US Dollar Index (DXY) jumped to its highest level since late November at 92.14. At the time of writing, the DXY is up 0.5% on the day to 92.10. The dollar’s march northward remains unchanged and is trading at new 2021 highs above the 92.00 barriers tracked by the United States Dollar Index (DXY).

The dollar’s push above 92.00 was also helped by the yield on the 10-year US benchmark, which briefly tested levels above the 1.60% benchmark for the first time since February 2020. The dollar continues to outperform its peers following the report and the US dollar. The index was last up during the day at 92.00.

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US Dollar Rebounds, Yields Rise Amidst Weakening ADP Job Growth

US Dollar Rebounds, Yields Rise Amidst Weakening ADP Job Growth

The dollar is recovering early in the US session as weakening job gains from the ADP reduce stock futures. Besides, Treasury yields rebounded slightly. At the moment, the pound sterling is the strongest in the day, followed by the Canadian dollar. The New Zealand dollar tops the lower Australian currency, followed by the Swiss franc and the yen. Now attention will be drawn to the movement of yields, the reaction of the stock, and the general sentiment.

In February, the number of employed in the private sector of the US ADP increased by 117 thousand, which is lower than the forecast of 168 thousand people. By the size of the company, the small business added 32 thousand jobs, medium business – 57 thousand, large business – 28 thousand. By sector, the number of jobs in the production of goods decreased by -14 thousand. The number of jobs in the service sector increased by 131.

The labor market continues to show a sluggish recovery, according to Nela Richardson, the chief economist at ADP. We can see that large companies are increasingly feeling the impact of COVID-19, while job growth in the goods sector is stalled. As the pandemic is still in the spotlight, the service sector remains at a significantly lower level than it was before the pandemic; however, this sector is likely to gain the most over time through reopening and increased consumer confidence.
The Dollar Index (DXY) Regains but Stays Capped
The dollar continues to be supported by the fundamental background. DXY was unable to advance further north of 91.00 on a more serious note on Wednesday, retreating into negative territory after hitting multi-week peaks in the 91.35 / 40 band.

Investors continue to debate whether incentives from the government and central bank are excessive. The possibility of inflation accelerating as the global economy recovers have raised concerns that monetary policy may need to be tightened sooner than expected. This boosted sovereign bond yields this year and halted bullish rallies in the stock markets.

Despite the strong rebound, the current DXY spike is seen as corrective only as the broader bearish outlook continues to weigh on the dollar. If the region 91.60 is passed, then the next focus of attention should shift to the level (fall of 2020-2021) at 92.46.

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US dollar remains under pressure

US dollar remains under pressure

The USD rallied 0.60% in early in late Asian – early European trade before failing to follow through higher and dropped immediately after retesting Wednesday’s open and Thursday’s highs. Fundamentally speaking we are sill very much bearish here and the next ley level is the 90.375 which is the February – March 2018 key resistance level.

Once this level broke back in 2018 the DXY rallied 13.7% for about 2 years so this is quite the level to look for. Should this level break  the next level is the 89.50

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