US payrolls beat expectations.
US non-farm payrolls increased 261,000 for October, above consensus forecasts of 200,000 and the September increase was revised higher to 315,000 from the original estimate of 263,000. Manufacturing jobs increased 32,000 on the month and there were employment gains across all major categories for the month.
The household survey recorded an increase in the unemployment rate to 3.7% from 3.5% and above consensus forecasts of 3.6% with the number of people employment recorded as declining 328,000 while the participation rate declined marginally to 62.2% from 62.3%.
Average hourly earnings increased 0.4% on the month, slightly above expectations of 0.3%, although the year-on-year increase slowed to 4.7% from 5.0%.
Fed Governor Collins stated that it makes sense for the central bank to switch to smaller rate increases, but she added that rates may need to increase more than she anticipated in September.
She added that data on earnings are inconsistent with the 2% inflation target while it is premature to speculate where the rate cycle will end.
During Friday, there was further optimism that China would relax its coronavirus policies and effectively abandon the zero cases target.
In response, there was optimism that the global economy would post a strong rebound. There was strong demand for equities despite higher bond yields.
The dollar advanced in an immediate response to the US employment report, but was then subjected to a sharp reversal with sharp losses across the board.
Commodity currencies posted strong gains amid hopes that China would relax coronavirus restrictions while defensive dollar demand also declined.
The dollar retraced some of the losses on Monday after a Chinese denial of changes.
The latest labour-market data recorded a strong employment increase of over 108,000 for October from 21,000 previously and substantially above consensus forecasts of 10,000 while the unemployment rate was unchanged at 5.2%.
Dollar dips sharply on global rebound hopes. The Euro edged higher into the US employment report. The final reading for Euro-Zone PMI services-sector index was revised higher to 48.6 from the flash reading of 48.2 with a stronger than expected Spanish reading.
EUR/USD dipped to lows just below 0.9750 after the US jobs data. There was a EUR/USD surge to highs at 0.9965 as the dollar posted sharp losses as long dollar positions were dumped.
CFTC data recorded a further surge in long, speculative Euro positions to the highest level since June 2021. EUR/USD retreated slightly to 0.9940 on Monday.
Treasuries were subjected to choppy trading after the jobs data, but with little net change as the 10-year yield trading around 4.15%.
The yen lost ground on the crosses as risk appetite surged. USD/JPY still dipped sharply to lows near 146.50 amid wider US losses before a recovery to just above 147.00.
The Swiss franc was mixed with EUR/CHF edging higher to 0.9900. USD/CHF posted sharp losses to 0.9940 before stabilising above 0.9950.
Sterling was subjected to very choppy trading on Friday as global risk conditions had a key impact during the day. GBP/USD dipped to 1.1150 after the US jobs data before a surge to 1.1375 amid hopes for a global growth rebound. GBP/USD retreated to 1.1320 on Monday.
Commodity currencies posted very strong gains amid the big reversal in risk conditions. AUD/USD surged to highs at 0.6480 before a correction to 0.6420 on Monday. The strong employment gains also boosted the Canadian currency. USD/CAD slumped to 1.3480 before a recovery to 1.3540 on Monday.