Dollar retreats from payrolls spike as kiwi jumps and CPI test looms

The dollar gave back part of Friday's payrolls rally as traders turned their attention to US inflation data. Investing.com reports that the dollar retreated from its post-jobs spike as markets braced for the US CPI test, while the New Zealand dollar was the standout mover.

Early in Asia the picture was different. Investing.com said the US dollar held onto its payrolls gains while the NZ dollar rose after an election. By the European morning, Investing.com reported that sterling firmed as the dollar retreated from its Friday rally.

The fixings as a reference point

The ECB reference rates of Monday 9 November capture the shift. These are official fixings, one per business day, compared here with the 6 November fixings.

• NZD/USD fixed at 0.5613, up 1.25%, the largest move among the pairs tracked.
• AUD/USD fixed at 0.6894, up 0.34%. It is still 1.63% below its fixing of 2 November.
• EUR/USD fixed at 1.1193, up 0.25%.
• GBP/USD fixed at 1.3416, up 0.23%.
• USD/JPY fixed at 157.95, down 0.24%.
• USD/CAD fixed at 1.4103, up 0.26%, so the Canadian dollar lagged. The pair is 0.92% higher than five fixings ago.
• USD/MXN fixed at 18.613, down 0.48%.

Chart: NZD/USD on TradingView.

Yen, China and the Iran talks

The yen remains in focus. investingLive's Asia-Pacific wrap cites the WSJ as reporting that Japan spent a record $50 billion in one day to defend the yen, as data confirms. The same wrap says Qatar described US-Iran talks as alive as Trump met the Qatari prime minister, with oil swinging on mixed signals. It also reports that China extended its suspension of 24% tariffs on US goods and kept a 10% levy ahead of APEC.

China's October CPI rose 0.7% from a year earlier, below the 0.8% expected and the 0.9% prior, according to investingLive. The outlet called the softer inflation a mild negative for the yuan and a mixed read for the Australian dollar and other commodity currencies. USD/CNY fixed at 6.673, almost unchanged.

Data and Treasuries

In Europe, the Eurozone Sentix investor confidence index fell to 2.4 from 2.7, above the 2.1 expected, investingLive reports. Expectations declined again while the current situation reading held at -3.3. investingLive had said beforehand that the release would not change anything for the ECB.

In the US, the New York Fed's October survey showed one-, three- and five-year inflation expectations unchanged at 3%, 3.3% and 3.9%, per investingLive. Expectations of rising unemployment hit their highest since April 2020. September wholesale inventories rose 0.7% against 0.6% expected, investingLive reports.

The Treasury sold $58 billion of 3-year notes at a high yield of 4.627%, with a 0.5 basis point tail and a bid-to-cover of 2.53 against a 2.64 average, according to investingLive, which graded the sale C−. Investing.com described Treasuries as treading water after the jobs shock, with CPI and more auctions ahead. For background on why yields matter for currencies, see our sister site's explainer on how bond yields move FX.

On central banks, the ECB published a Christine Lagarde interview with Yomiuri Shimbun on 7 November. The pack gives no detail of its content.

What to watch next

1. US CPI. Both Investing.com and investingLive's European wrap name it as the key test for the dollar after the payrolls surprise.
2. More Treasury auctions. Investing.com flags an auction gauntlet after a softer 3-year sale.
3. US-Iran developments. investingLive says markets await fresh news, with oil caught between deal hopes and escalation risk.
4. Midterm fallout. investingLive sees the Democratic Congress as a net negative for growth given constrained fiscal expansion.
5. APEC. China's tariff decision was framed ahead of the meeting.

Chart: EUR/USD on TradingView.