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Dec 02 - 11:55 AM

EUR/USD - COMMENT-Payrolls Reaction Might Encourage EUR/USD Bulls

By Christopher Romano  —  Dec 02 - 10:45 AM

Above-forecast U.S. jobs data isn't usually fodder for EUR/USD bulls, but Friday's price action might give them some encouragement.

EUR/USD retreated from 6-month highs after unexpectedly strong employment data drove rates EDH3 and the dollar higher, but it held onto gains for the week, its up trend off the September low unscathed.

The price suggested profit taking before the weekend and the possibility that investors may be looking past the employment report amid elevated expectations of an economic slowdown.

Interest rates markets supported this view.
Though U.S. Treasury 2-year US2YT=RR and 10-year US10YT=RR yields rallied after the payrolls report, they remain lower on the week, down trend intact.

Similarly, while Eurodollar futures prices EDH3 fell as traders factored in a higher terminal Fed rate, they're still higher on the week and well above the November monthly low.

Treasury yield spreads continue to signal slower economic growth is likely.
The 2-year/10-year spread inverted further after the jobs data while the 3-month/10-year spread tightened only marginally.

Market reaction so far suggests investors may still be willing to sell the dollar unless U.S. rates rally significantly.

For more click on FXBUZ

Refinitiv IFR Research/Market Commentary


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