North American Summary and Highlights 10 January
Overview - The USD bounced on a stronger than expected non-farm payroll, though with equities struggling on a rise in Michigan CSI inflation expectations, gains in USD/JPY failed to hold.
North American session
A significantly stronger than expected 256k increase in US non-farm payrolls saw the USD bounce by around 0.5% across the board, though USD/CAD was an exception with a proportionately even stronger 92k increase in Canadian employment seeing an initial bounce quickly erased and more. The USD largely sustained its gains against EUR, GBP and AUD, with EUR/USD falling below 1.0250 from above 1.03, and GBP/USD near 1.22 from above 1.23.
However, with equities under pressure, particularly after January Michigan CSI data showed a rise in the 5-10 year inflation expectation to 3.3% from 3.0%, USD/JPY more than fully erased its initial bounce and settled near pre-data levels slightly below 158. The dip in USD/CAD also found buyers, moving to around 1.4430 compared with pre-data levels near 1.4410.
European morning session
The USD was slightly weaker against the EUR, JPY and GBP through the European morning, with EUR/USD gaining around 20 pips to trade above 1.03 and USD/JPY dropping around 40 pips to 158, hitting a low of 157.62 mid-session.
However, the USD was otherwise mixed. It made some gains against the CHF, with EUR/CHF rising 30 pips o 0.9417, and also made small gains against the AUD. USD/CAD was marginally softer. EUR/NOK rose two figures after weaker than expected Norwegian CPI. Headline fell to 2.2% y/y and core to 2.7% against consensus of 2.5% and 2.8% respectively. EUR/NOK initially gained 5 figures to 11.79 before dropping back to 11.76, leaving USD/NOK unchanged.