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The New York foreign exchange market witnessed an initial surge in the US dollar's strength
however this momentum proved to be short-lived.
“In the aftermath of today’s eagerly anticipated release of US employment statistics, the New York foreign exchange market witnessed an initial surge in the US dollar’s strength. However, this momentum proved to be short-lived.
The expectations leading up to the release of US employment statistics, especially the Non-Farm Payrolls (NFP) data, had hinted at a somewhat lackluster growth trajectory, echoing the trends observed in the preceding three months. To the market’s surprise, the actual results exceeded expectations significantly, with an impressive addition of 336,000 jobs, far surpassing the anticipated 170,000. This marks the most robust job growth since January of this year. Consequently, expectations for further interest rate hikes in the United States for the remainder of the year saw a sharp increase. While the short-term interest rate market had largely anticipated a status quo regarding rate hikes, the inclusion of rate hikes in the actual forecast temporarily tipped the scales in favor of an increase. Subsequently, the market recalibrated, leaving expectations for rate hikes and a status quo in a competitive equilibrium.
These developments led to an initial surge in US bond yields, propelling the US dollar upward. Notably, the USD/JPY pair climbed from the 149.00 yen range to reach 149.53 yen. Meanwhile, the EUR/USD pair retreated from around 1.0560 to the 1.0480 range, and the GBP/USD pair dipped from approximately 1.2210 to the 1.2100 range. Consequently, the US dollar exhibited strength across the board.
However, this ascent in US bond yields proved short-lived, as the 10-year bond yield receded from 4.8852% to approximately 4.75%. Consequently, the US dollar, which had initially strengthened, swiftly reversed its course. For instance, the USD/JPY pair retraced to the 149.00 yen range, partially erasing its earlier gains. Nevertheless, compared to the yen’s depreciation driven by the earlier surge in US bond yields, the US dollar’s retreat was relatively muted. Consequently, the EUR/USD and GBP/USD pairs witnessed a weakening US dollar, surpassing levels observed before the employment statistics release.
The EUR/USD pair rallied to approximately 1.0600, displaying caution amidst buying around significant levels but ultimately closing around 1.0580. Meanwhile, the GBP/USD pair extended its gains to reach around 1.2260.
In parallel with these currency movements, the Japanese yen appreciated significantly against other major currencies. The EUR/JPY pair, initially trading around 157.50 yen, experienced yen buying following the release of US employment statistics, pushing it down to the 156.60 yen range. Subsequently, it staged a remarkable recovery, surging to the 158.20 yen range. Similarly, the GBP/JPY pair, which began around 182 yen, initially dipped below 181 yen before ultimately reaching 182.98 yen.
Against the backdrop of a three-day weekend in Japan and a holiday in the United States on Monday, the market displayed heightened sensitivity, resulting in dynamic fluctuations.
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