Nonfarm Payrolls during November were +199k, outpacing the +185k estimate. Private Payrolls were +150k, below the +159k estimate, and Manufacturing Payrolls were +28k, below the +30k estimate. The Unemployment Rate dropped to 3.7% from the October 3.9% reading.
The USD strengthened immediately following the payrolls numbers but has since retreated from the day’s highs. Notable dollar gains compared to yesterday’s close: +0.56% vs. GBP, +0.48% vs. EUR, +0.42% vs. AUD, and +0.29% vs. JPY. The dollar index is +0.44% today (at 104.006) and +0.53% for the week.
On Thursday Bank of Japan officials hinted that they could be nearing a shift away from negative interest rates, sparking a JPY rally. USD/JPY experienced an intraday ‘flash-crash’, dropping 1.58% in minutes as long dollar positions were frantically unwound once the pair traded below 144.00, eventually touching a 141.70 low. Yesterday’s high/low range was 3.80%, extraordinary currency volatility.
The U.S. yield curve is higher today following the strong payroll number. The biggest gains are in the near end of the curve: 2y +0.093%, 3y +0.091%, 4y +0.089%, and 5y +0.083%.
Next week’s economic calendar has several key scheduled releases: CPI on Tuesday and PPI on Wednesday. But the primary focus will be the FOMC’s rate decision announcement on Wednesday at 2pm ET and Fed Chairman Powell’s policy address at 2:30pm ET.
