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FOREX: Strong Greenback Bounce Post Weaker Payrolls, USDMXN Fresh YTD High

FOREX
  • Despite a far softer than expected NFP reading for October at just 12k (cons 100k) along with a heavy, and highly important, two-month downward revision of -112k, the initial punch lower for US yields and the USD reversed course throughout the session.
  • Terminal rates in the US have seen stronger climbs on the week and this has contributed to the strong dollar reversal on Friday, with the USD index looking to close the week broadly unchanged around 104.25.
  • USDJPY (+0.60%) displayed its usual volatility over major US data points, initially dipping around 90 pips back to session lows around 151.80, before then reversing all the way back to 153.00, where spot currently stands as we approach the close.
  • EURUSD made a very brief showing above 1.0900 before also reversing back to 1.0840 at typing. The softer single currency and more stable sentiment in the UK helped EURGBP (-0.62%) ease back to 0.8385 after its impressive 2-day advance following the UK budget.
  • Upward pressure on US yields and the close proximity to the US presidential election has seen a notable move higher for USDMXN into the close, rising over 1% to print a fresh year-to-date high. Investors remain wary of what another Trump term may mean for the Mexican economy, as well as pessimism surrounding the ongoing domestic reforms continuing to weigh on the peso. A clear break above the prior 20.2181 high would resume the uptrend and open 20.4578, the 1.764 projection of the Sep 18 - Oct 1 - Oct 4 price swing.
  • The RBA meeting and US ISM Services PMI are notable data points on Tuesday, ahead of the US election. The FOMC decision and press conference will be on Thursday next week.
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