USD consolidates payrolls gains – Scotiabank
07.10.2024, 11:25

USD consolidates payrolls gains – Scotiabank

The US Dollar (USD) is consolidating last week’s solid rise, Scotiabank’s Chief FX Strategist Shaun Osborne notes.

USD retains a firm undertone on yields

“After strong gains last week, stocks are starting the week off on a slightly softer note while bonds are broadly weaker. US 10Y yields are trading above the 4% point for the first time in two months after Friday’s US jobs data erased the risk of another jumbo rate cut from the Fed in November. Yield spreads have moved supportively for the DXY and, with perhaps a little more focus on the looming presidential election in the US, the window for the USD to remain firm, or perhaps firm a little more, is clearly open.”

“The rebound in the USD comes a little earlier than the typical seasonal pick up we see in Q4 before a late year fade. The DXY’s performance on the charts is bullish following a positive close on the week through Friday. Intraday patterns suggest a minor consolidation ahead of another push higher, potentially to the 103-104 range in the next couple of weeks. The Fed’s Kashkari, Bostic and Musalem are speaking later today (the latter two after our market close).”

“Japan releases labour cash earnings data for August this evening. July’s numbers were revised down slightly (to 3.4%) from preliminary data but underlying trends in wages are still strong. Another firm gain in pay may not move the dial on low October tightening bets (less than 1bps priced in) for the 31st but should bolster expectations that the BoJ may tighten again at its next meeting on December 19th.”

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