The U.S. dollar, as measured by the DXY index, started the week on a positive note, rallying more than 0.65% to 102.75, bolstered by risk-off sentiment and higher U.S. treasury rates in a session characterized by thinner liquidity and lower trading volume, with European markets closed for the Easter Holiday.
Bond yields extended their recovery that began Friday after the latest U.S. nonfarm payrolls report showed that job gains remained remarkably strong last month, with U.S. employers adding 236,000 workers versus 239,000 expected, despite growing macro headwinds, including more restrictive credit conditions for households and businesses.
Labor market tightness may give the Fed ammunition to continue lifting borrowing costs in the near term, suggesting that a “pause” may not yet be in the cards for May. In fact, traders now see more than a 70% chance of a 25 bp hike at next month’s FOMC meeting, up sharply from 10 days ago, when the baseline scenario assumed no change.
Bond yields extended their recovery that began Friday after the latest U.S. nonfarm payrolls report showed that job gains remained remarkably strong last month, with U.S. employers adding 236,000 workers versus 239,000 expected, despite growing macro headwinds, including more restrictive credit conditions for households and businesses.
Labor market tightness may give the Fed ammunition to continue lifting borrowing costs in the near term, suggesting that a “pause” may not yet be in the cards for May. In fact, traders now see more than a 70% chance of a 25 bp hike at next month’s FOMC meeting, up sharply from 10 days ago, when the baseline scenario assumed no change.
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