The ICE U.S. Dollar Index DXY, +0.20% which measures the buck against six rivals, was 0.3% higher at 94.987, having recovered from a dive immediately following the jobs report. For the week, the index is looking at a modest increase.
The U.S. dollar recovered from earlier losses against many of its major rivals on Friday, buoyed by a better-than-expected ISM services index, which came in at a 12-year high. Earlier in the session, the greenback had been rattled by a smaller-than-expected rebound in October jobs data.
In Turkey, the Turkish lira dropped 1.8% against the buck on higher-than-expected October inflation figures, bringing inflation to 11.9% year-over-year.
What are currencies doing?
The broader WSJ U.S. Dollar Index BUXX, +0.27% was 0.4% higher at 88.03, slated for a 0.3% gain.
The euro on Friday EURUSD, -0.4032% fetched $1.1606, down from $1.1658 late Thursday in New York. On the week, the euro is on track for a 0.4% loss on the week.
Against Japan’s currency, USDJPY, -0.01% the dollar traded at ¥114.32, modestly higher from ¥114.08 late Thursday, and up 0.2% since last week Friday.
The British pound GBPUSD, +0.1225% traded at $1.3074, edging up from $1.3058 late Thursday. Sterling on Thursday tumbled 1.4%, according to FactSet data, after the Bank of England raised its key interest rate a quarter-percentage point to 0.5% but sounded in no hurry to follow up with another increase soon. On the week, the pound has gained a modest 0.1%.
Elsewhere in emerging markets, the greenback rallied against the Turkish lira USDTRY, +2.3912% surging to a 10-month high, after October consumer price inflation in Turkey rose to 11.9%, higher than consensus estimates of 11.3%. The dollar last bought 3.8763 lira, compared with 3.7972 lira late Thursday.
What’s driving the market?
U.S. payroll data came in below consensus, pushing the dollar and Treasury TMUBMUSD10Y, -0.72% yields lower.
Nonfarm payrolls for October read only 261,000, compared with the 325,000 MarketWatch consensus estimate. After the September jobs report reflected the impact of the hurricanes that hit the U.S. in August and September, economists had expected a recovery of jobs data in October.
Still, a December Federal Reserve rate increase remains priced in, with expectations near 100%, suggesting that even the weaker data should not be shaking up the central bank’s rate raising trajectory.
The greenback on Thursday edged down versus rivals but remained largely rangebound after the official unveiling of a Republican-backed tax plan and President Donald Trump’s nomination of Jerome Powell has to become the new chairman of the Federal Reserve.
What are strategists saying?
While the jobs report undercut consensus figures, it “isn’t as disappointing as it looks when the cumulative 90,000 upward revision to employment in the preceding two months is factored in”, wrote Paul Ashworth, chief U.S. economist at Capital Economics.
“Of greater concern is the slowing rate of wage growth, which is set to be the most likely impediment” said David Lamb, head of dealing at FEXCO Corporate Payments, of the Federal Reserve’s monetary policy going forward.
What’s the data revealing?
The ISM nonmanufacturing index for October rose to the highest level since August 2005 at 60.1. September factory orders rose 1.4%, slightly above the MarketWatch consensus of 1.3%
The U.S. unemployment rate stood at 4.1% in October, down versus the 4.2% expected by economists polled by MarketWatch. Average hourly earnings did not change in October, compared with the consensus expectation of a 0.2% uptick.
The U.S. trade deficit stood at $43.5 billion in September, slightly higher than the $43.4 billion expectation.
The Markit services purchasing managers index for October came in at 55.3, compared with the FactSet consensus estimate of 55.9.
Minneapolis Fed President Neel Kashkari was scheduled to give a speech on monetary policy and the 2018 outlook at a Women in Housing and Finance luncheon in Washington.
