Dollar rebounds as US payrolls smash forecasts and Canada jobs miss

The dollar rebounded on Friday after US October payrolls came in far above forecasts. Investing.com reports that the tech rout and strong US jobs data lifted safe-haven demand for the greenback anew, a shift from the flat dollar our last recap described ahead of the release.

A blowout jobs report

The US economy added 165,000 jobs in October against 65,000 expected, according to investingLive. The prior month was revised up to 60,000 from 29,000, for a two-month net revision of 84,000. The unemployment rate fell to 4.1% against 4.2% expected. Average hourly earnings rose 0.4% on the month and 3.1% on the year, both above forecasts. One softer detail: the U6 underemployment rate rose to 7.9% from 7.6%.

Bond markets reacted quickly. Investing.com reports that Treasuries fell as the payrolls data lifted yields across the curve.

Later data added to the firmer US picture. The University of Michigan's preliminary November consumer sentiment index rose to 51.0 from 46.3, beating the 48.0 forecast, investingLive reports. One-year inflation expectations eased to 4.3% from 4.7%.

The fixings as a reference point

The ECB reference rates of 6 November show a broadly firmer dollar against the previous fixing of 5 November. EUR/USD was fixed at 1.1165, down 0.53%. GBP/USD was fixed at 1.3385, down 0.55%. The commodity and risk-linked currencies fell furthest: AUD/USD dropped 1.85% to 0.6871 and NZD/USD lost 1.39% to 0.5544. USD/CAD rose 0.72% to 1.4066. USD/JPY was little changed at 158.33, consistent with the yen's safe-haven role during the tech sell-off. You can follow the Aussie on a AUD/USD chart.

The investingLive Asia-Pacific wrap said the global tech stock rout raised growth concerns. The same risk-off mood hit crypto, as covered in our sister site's report on Bitcoin after $1 billion in liquidations and the strong jobs data.

Loonie hit by a weak Canadian report

Canada's jobs data, released at the same time as the US figures, went the other way. Employment fell by 4,700 in October against an expected gain of 13,600, investingLive reports. The unemployment rate rose to 6.7% from 6.5%. Full-time jobs fell by 18,100. Wage growth slowed to 2.2% year on year. The contrast with the US report puts the focus on USD/CAD.

Trade policy is also in play. According to investingLive's Asia wrap, US Democrats are reportedly targeting tariffs on Canada as a first step to rolling back parts of the administration's trade policy. BoC Governor Macklem said he remains optimistic about lower US tariffs but cannot rule out further escalation.

Europe and the pound

Eurozone retail sales fell 0.7% in September against a 0.1% drop expected, investingLive reports. Germany posted the largest fall at 2.0%. Sterling slipped as the dollar held firm before payrolls, according to Investing.com, a day after the Bank of England's hike to 4%.

On the Fed, investingLive's European wrap noted that New York Fed President Williams said the US economy remains resilient.

Iran headline lifts stocks

Later in the US session, investingLive cited an Al-Arabiya report that Iran is responding positively to the latest mediator proposals and is waiting for practical steps from Washington. Oil came under pressure and stocks rose, with the S&P 500 up almost 1% and the Nasdaq nearly 2%, the outlet reported.

What to watch next

• US-Iran talks: whether Washington takes the practical steps Tehran is waiting for, per the Al-Arabiya report via investingLive.
• Canada tariffs: progress on the reported Democratic push to roll back tariffs on Canadian products.
• Risk sentiment: whether the tech-led sell-off that weighed on the Aussie and kiwi continues after Friday's rebound in US stocks.