Notably strong US jobs data released Friday pushed the US Dollar and its Treasury Yields strongly higher as it suggests the Fed will be more reluctant to cut rates.

1. Last Friday, considerably stronger than expected US jobs and average earnings data was released. The non-farm payroll increased by almost 100k more jobs than expected, while average hourly earnings rose month on month by 0.4%, above the consensus forecast of 0.3%. This suggests that the environment is not ideal for the Fed to make large or maybe even any rate cuts, but these cuts had already been priced in. This sent the US Dollar and its Treasury Yields roaring higher during most of Friday’s New York session, and calls into question the long-term bearish trend in the greenback. It is worth remembering that a further 0.50% of cuts are expected before the start of 2025 by 80% of market participants.
2. The Japanese Yen saw a dramatic weakening last week on a high level of volatility. Japan’s “FX Ambassador” Mimura warned that he will be monitoring the FX market’s speculative movement in the Yen. This means that outsize moves in the Yen could face pushback from its central bank, so that is something for Yen traders to keep in mind. It is by far the most volatile major currency in the Forex market.
3. It is likely to be a quiet day in the markets, in the absence of any scheduled high-impact data releases.
4. Gold and the S&P 500 Index remain relatively near their recent record highs, despite the US Dollar upturn.

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