LONDON (Reuters) – Blow-out U.S. jobs growth figures on Friday compounded investor worries that Federal Reserve interest rates will stay elevated for longer or even rise further, sending the dollar higher and casting a pall over stocks and bonds.
U.S. non-farm payrolls grew by 336,000 in September, far exceeding a consensus estimate of 170,000 rise. The unemployment rate also remained unchanged at 3.8%, an 18-month high.
U.S. stock futures turned lower after the data.
The dollar index, which rose after the numbers were released, was up 0.5%, with the yen falling closer to 150 yen to the dollar, as stock indexes in London and Europe pared their gains for the day.
Simon Harvey, head of FX Analysis at Monex Europe, said the “monstrous payrolls” figures and upwards revision to the August numbers will support the dollar’s advance.
“Given the strength in today’s employment figures, markets can’t fully discount the probability of a Fed hike in the fourth quarter, even as it coincided with weaker wage data. That’s likely to keep the greenback supported, especially against rate sensitive currencies,” Harvey said.
Pre-data, the greenback was already heading for a 12-week winning streak after hitting its best level in about 11 months earlier in the week.
The euro, meanwhile, was heading for a record 12th week of declines against the dollar, compounded by the further gains by the greenback.
Ten-year U.S. Treasury yields rose to 4.88% after climbing 55 basis points in a five-week-long selloff that has dragged prices for Treasuries to 17-year lows, and capped the appetite for risk-taking worldwide.
After talk of oil hitting $100 a barrel, crude was down 0.4% at $83.72, thought still facing its steepest weekly decline since March, as markets worried that higher for longer rates would crimp global economic growth and hit fuel demand.
News that Russia’s government was lifting a ban on pipeline diesel exports via ports also dampened oil prices.
Euro zone bond yields gained, while the closely-watched gap between German and Italian borrowing costs – an indicator of stress in Italian finances – hit its highest since March.
Global bond funds posted massive weekly outflows.
The MSCI All-Country stock index turned lower. It lost about 8% since its July peak, leaving it about 7% ahead for the year.
In Europe, the STOXX 600 index also lost its earlier gains to turn down 0.1% after the U.S. data. It is on course for its third consecutive week of losses after hitting a six-month low this week, slashing its gains for the year to 4%.
YEN WATCH
MSCI’s broadest index of Asia-Pacific shares outside Japan rose 0.85%. Tokyo’s Nikkei was down 0.3%.
Another round of bond selling would probably propel the dollar further along a weekly winning streak that is already its longest ever against the euro. The dollar index is up 12 weeks in a row, equalling a streak that ran from July to October 2014.
The run-up has the euro, at $1.049, pinned near an 11-month low, and sterling, down 0.6%, not far from a seven-month trough.
The dollar index was up 0.5% at 106.91.
“A push through 107 would provide technical evidence of trend continuation,” said Capital.com analyst Kyle Rodda.
Japanese money-market data showed no anomalies of a kind that might have accompanied intervention. But the move was eye-catching enough to keep traders on guard.
The yen was last trading at 149.43.
Gold dipped 0.3% to $1,813 an ounce after nine days of losses driven by rising global bond yields. [GOL/]
Source: Economy - investing.com
