North American Summary and Highlights 8 Dec

North American session

The USD gained ground across the board after the US employment report, rising around 0.25%. Trade was however choppy. The initial USD bounce was reversed but the USD built modest gains later in the session, before ending a little off post-data highs.

The report itself was on the strong side of expectations, although after revisions the rise in non-farm payrolls was broadly in line with expectations. However, the 0.4% rise in average earnings and the decline in unemployment to 3.7% suggested a stronger labour market, and US yields rose in response. Generally the details are consistent with a modest loss of economic and inflationary momentum but with few signals for any weakness.

December's preliminary Michigan CSI of 69.4 was up from 61.3 and the highest since August. The rise was led by expectations which appear to have been lifted by a sharp fall in inflation expectations following surprising strength in November.

European morning session

USD/JPY extended the recovery seen through the Asian session in the European morning, gaining half a figure to 144.60, while other pairs were mostly unchanged. USD/CAD was slightly lower, dropping around 15 pips to 1.3565, and EUR/SEK was a little higher, rising 3 figures to 11.23.

There wasn't much news, but the SEK move may have been due in part to the Swedish data which showed a 0.3% decline in industrial production in October, while service sector output was down 2.4% y/y. The GDP data nevertheless showed a surprise 1% rise m/m, but this was related to a strong net export rise on the month which is likely to be reversed in coming months.