On Friday, the US jobs report took center stage and it was a fairly decent one – all things considered. Non-farm payrolls more or less came in within estimates while the unemployment rate dropped slightly by 0.1%. While the former (+236K) may have slowed down below its 12-month average (+345K), the latter is lower from a year-on-year comparison and that continues to suggest that the labour market is still largely holding up in the US.
That is seeing markets grow more confident about a 25 bps rate hike to follow next month by the Fed. The CME Fedwatch Tool is currently indicating 71% odds that the Fed will raise rates by 25 bps, with the remaining 29% odds siding with a no change decision.
The market reaction favoured the dollar slightly initially, before another round of bids fed through in US trading yesterday to solidify the greenback’s post-NFP status. USD/JPY jumped up by over 1% yesterday to a high of 133.85, keeping just above its 100-day moving average of 133.30 at the moment.
The softness in the yen was also helped by remarks from BOJ governor, Kazuo Ueda, who has now officially succeeded Haruhiko Kuroda at the helm of the Japanese central bank.
Then, we have the return of Asia Pacific markets earlier today where we saw China consumer price inflation underwhelm with a slight retracement to some of the dollar strength from yesterday. Bitcoin also jumped above the $30,000 mark for the first time in ten months. You can check out Eamonn’s recap here.
And that is where we are now, getting settled in as European markets are also set to return from the Easter break. There will plenty of key risk events coming up later in the week and if anything else, keep an eye on the bond market in the days ahead.