USD supported after US jobs and ahead of CPI data

[MongiIG]

Strong US data continues to support a stronger dollar as traders consider the upside surprise for the incoming consumer price data on Thursday.

 Jeremy Naylor | Writer, London | Publication date: Monday 10 October 2022 

Strong US jobs data

Friday's non-farm payrolls (NFPs) showed that 263,000 jobs were created in the United States last month.

The unemployment rate fell to 3.5%, from 3.7% in August, and average hourly earnings rose 0.3% on last month, and 5% on September 2021.

The number of people employed in the US is now higher than it was before the start of the Covid-19 pandemic. And according to the latest report of the bureau of statistics, job openings fell to 10.1 million, their lowest level since May 2021, while only six million people are looking for a job.

Meanwhile global equity markets fell after the publication of US jobs data for September.

On Friday the S&P 500 dropped 2.8%, while the Nasdaq shed 3.8%. US stock and bond markets will remain closed today for Colombus Day.

Overnight the APAC region followed suit, and European equity markets opene lower this morning.

Interest rates

All this reflects a tight market that gives enough room to the US Federal Reserve (Fed) to continue to raise interest rates to bring inflation down.

This Thursday, consumer price index (CPI) is expected to rise by 8.1% in September year-on-year (YoY), after 8.3% in August. Core CPI increase is expected to accelerate to 6.5%, after 6.3% in August, matching the peak recorded in March 2022, a then 40-year high.

Should inflation data rise more than expected, like it did last month, it could give the dollar a leg up and send equity markets lower.

[CJ-TradingFloor]

5 minutes ago, MongiIG said:

Strong US jobs data

Friday's non-farm payrolls (NFPs) showed that 263,000 jobs were created in the United States last month.

Placed trades on USDCHF and USDJPY last week on Friday for NFP.

USDCHF before NFP, 7th October 2022. Buy trade

 

USDCHF after NFP. Breakout looks like USD strength to continue.

 

I think CPI data can still push USD to strengthen

[CJ-TradingFloor]

USDJPY before NFP, 7th October 2022. Buy trade

 

USDJPY after NFP. Breakout looks like USD strength to continue.