- Nonfarm payrolls increase by 263,000 in September, in line with expectations.
- Dollar rises across the board as US yields soar.
- USD/CHF jumps to test recent highs around 0.9950 and pulls back.
Buoyed by the recovery of the US dollar after the NFPs, the pair USD/CHF rallied to test the key 0.9950/60 resistance zone and then pulled back. The pair reached a weekly high at 0.9953 and then pulled back to 0.9915.
The 0.9950/60 area remains critical support that capped the upside last week and also on Friday. A consolidation above could trigger further gains for the dollar. As long as it remains below, the Swiss franc could recover ground. Immediate support comes in at 0.9915, followed by 0.9875 and the weekly low at 0.9780.
Following the report, US yields jumped with the 2-year nearing the all-time high near 4.35% and the 10-year yield hitting levels above 3.90%. DXY rose to 112.83, a new weekly high, and then pulled back, paring gains. It is up just 0.25%, hovering around 112.50.
NFPs cooled in September, but labor market remains strong
The US Department of Labor reported on Friday that jobs in the US economy (non-farm payrolls) increased by 263,000 in September, above estimates of 250,000. The Unemployment Rate unexpectedly fell from 3.7% to 3.5%.
“The unemployment rate returned to its lowest level in 50 years, 3.5%, thanks to a combination of solid job growth and a more or less flat labor force. Wage growth moderated slightly, but remains well above rates that are consistent with the Fed’s 2% inflation target. We continue to expect the FOMC to raise its policy rate by 75 basis points at its November meeting,” Wells Fargo analysts explained.
Despite Monday being a US holiday (Columbus Day), next week’s calendar is loaded with FOMC minutes on Wednesday, CPI on Thursday and retail sales on Friday. These numbers will likely weigh on expectations about the Fed’s monetary policy.
Technical levels
Source: Fx Street
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