Underlying confidence in the UK economy sapped support.

US non-farm payrolls increased 288,000 for September and above consensus forecasts of around 265,000, although the August increase was revised down to 275,000 from 308,000. Manufacturing jobs increased 22,000 while there was a small decline in retail jobs and government employment dipped 25,000 on the month.

According to the household survey the unemployment rate declined to 3.5% from 3.7% the previous month and below expectations of 3.7%. The number of employed increased just over 200,000 while there was a small decline in the participation rate.

Average hourly earnings increased 0.3% on the month, in line with consensus forecasts with the annual growth rate slowing to 5.0% from 5.2%.

US Treasuries dipped lower following the US employment report with expectations that the Federal Reserve would be able to maintain a hawkish policy stance and avoid any move towards a pivot. The 10-year yield increased to just above 3.90% before fading slightly.

Traders will be watching comments from Fed Governor Brainard closely on Monday.

Wall Street equities posted sharp losses in reaction to the hawkish US jobs data and expectations that the Federal Reserve would push ahead with a very hawkish policy stance.

There is a partial US market holiday on Monday, but Wall Street will be open.

Higher US yields and weaker equity markets were again key elements in providing further US currency gains after the US jobs data with European currencies again generally on the defensive.

The dollar held a firm tone on Monday and traded very close to 10-day highs.

Canada recorded an employment increase of 21,100 for September after a 39,700 decline the previous month.

The unemployment rate also declined to 5.2% from 5.4% and below consensus forecasts of 5.4%.

Over the weekend, there was an explosion on the only road and rail bridge from Russia to Crimea.

Russian President Putin called it an act of terrorism and blamed Ukraine with the reaction on Monday watched closely and there have already been missile attacks on Monday. Overall Euro-Zone confidence remained weak with further concerns over the energy sector.

Higher US yields provided strong dollar support. A slide in equities also underpinned the dollar on defensive grounds.

CTFC data recorded a further net increase in long Euro positions. EUR/USD dipped to lows below 0.9730 and remained below 0.9750 on Monday.

Higher US yields also undermined the yen. The Japanese currency failed to gain significant defensive support. USD/JPY posted highs to near 145.50 and traded only slightly below this level on Monday. There was no Bank of Japan intervention during the Asian session.

Hawkish National Bank rhetoric underpinned the Swiss franc. EUR/CHF dipped to 0.9680 with net USD/CHF gains to 0.9945.

Sterling was hurt by a fresh slide in risk appetite. Underlying confidence in the UK economy also sapped support. GBP/USD dipped sharply to lows near 1.1050. The Bank of England announced additional measures to underpin financial stability.

Commodity currencies were hurt by a slide in equities and vulnerable risk conditions. AUD/USD dipped to lows near 0.6350 on Friday. AUD/USD traded below 0.6350 on Monday as weak domestic and Chinese data undermined confidence.

The Canadian dollar gained support from higher oil prices and the sold US jobs data. USD/CAD settled around 1.3735 with little change on Monday.

Economic Calendar