NY Open: Dollar rebounds on strong payrolls

The October nonfarm payrolls report surprised to the upside, and the US dollar caught enough of a bid to recoup most of its overnight losses. The USD added 250,000 jobs, beating the 190,000 forecast. The unemployment rate was unchanged. EURUSD topped out at 1.1454 before the data and is hovering around the 1.1408 level as of 13:45 GMT.  The intraday EURUSD technicals are bearish while prices are below 1.1450 with a break of minor support at 1.1390 suggesting further losses to 1.1340. 

USDCAD jumped from 1.3057 to 1.3107 due to the better than expected US employment data and the “so-so” Canadian report. The Canadian Labour Market survey showed a gain of 11, 300 jobs, marginally beating the 10,000 that was forecast. However, short-term downtrend resistance at 1.3110 capped the rally.

Wall Street opened with a mixed tone. The Dow Jones Industrial Average (DJIA) and the S&P 500 opened with small gains while the Nasdaq is weighed down by a 5.17% drop in Apple shares.

The US midterm elections, the possibility of a renewed US/China trade dialogue, and the Federal Open Market Committee meeting will be the focus for markets next week. The Democrats are hoping to surf a “Blue Wave” to a House of Representatives majority, and the latest polls suggest they have an 81.7% chance of getting a majority. Nevertheless, Democrats are well aware that had the polls been correct in November 2016, they would be in the President Hillary Clinton era.

A Democrat House majority would be bad for Trump if they initiated impeachment proceedings. It would be bad for the US dollar if they demand a roll-back to tax cuts.

The FOMC meeting on November 8 may not be a complete snoozefest, but it will be a non-event. There isn’t even a press conference.