The dollar firmed on Friday after a surprisingly strong U.S. non-farm payrolls report indicated resilience in the U.S. labor market, while hopes for a ceasefire in the Iran war showed no signs of coming to fruition.
U.S. non-farm payrolls grew by 178k in March, the biggest increase in 15 months and above the forecast for 60k. That marked a rebound from the drop of 133k in February, which was revised from the previously reported fall of 92k.
The U.S. unemployment rate fell to 4.3%, confounding expectations that it would hold steady at 4.4%, while growth in average earnings slowed more than expected and the participation rate slipped.
The jobs data tempered lingering bets on the Fed cutting rates this year, with the market largely discounting an on-hold U.S. central bank. Current mediation efforts led by regional countries, including Pakistan, to broker a cease-fire between the United States and Iran have reached a dead end, the Wall Street Journal reported. Israeli and U.S. media reported that one U.S. crew member has been rescued after Iran shot down a warplane on Friday, as the war looked set to intensify with U.S. President Donald Trump threatening more attacks on civilian infrastructure. In fiscal matters, Trump requested a 10% cut in non-defense spending for the 2027 fiscal year and a massive $500 billion increase in the military budget, as the U.S. continues its war against Iran. A U.S. judge stood by his prior decision to block subpoenas issued in a criminal investigation into Federal Reserve Chair Jerome Powell, setting up a likely appeal that could further delay Trump’s move to install a more compliant central bank head. Softened by the payrolls report, EUR/USD was hurt further by the Iran mediation breakdown and faces resistance at the 55- and 100-DMAs. USD/JPY was eyeing the 160 level for potential 2-way option demand amid intervention risks. GBP/USD remained in a bearish trend, and AUD/USD was softer but rangebound and still stuck below 10-DMA.
U.S. Treasury yields rose 2-5bps across maturities, led by the front end. The 2s-10s curve flattened by 0.5bps
S&P E-mini futures were down 0.28%
Heading toward the close: EUR/USD -0.16%, USD/JPY +0.03%, GBP/USD -0.17%, AUD/USD -0.28%, DXY +0.15%, EUR/JPY -0.15%, GBP/JPY -0.19%, AUD/JPY -0.25%.(Burton Frierson)
