Greenback Fails to Appreciate Despite Superb Labor Market Data

The US dollar was trading lower against most of the major peers during the US session on Friday and the dollar index was down 0.1%, hovering near 96.25.

Earlier in the session, the US Department of Labor announced that the US economy created 250,000 new jobs in October, way above the expected 190,000 and more than double the 118,000 in September. The unemployment rate remained unchanged and stayed at 3.7%.

Further strengthening this report was average hourly earnings (wage growth) which jumped to 3.1% annually, up from 2.8% previously and wages are now rising the fastest since April 2009. This is a strong inflation signal and confirms the current Fed hiking trajectory.

The US dollar initially rose after this numbers, although only marginally, but failed to hold gains and declined shortly after.

On the other hand, US yields soared, with the 30-year yield again trading at cycle highs near 3.42%, while the 10-year yield climbed toward the 3.2% handle. Short-term yields also flew higher.

Rising yields spooked stocks today and the SP500 index fell as investors took profits from the recent rally and the index tested the crucial 200-day moving average, which has held and therefore the medium-term outlook for stocks appears bearish.