The US dollar continued on its road to recovery as it advanced against most of the major currencies, and soaked in the biggest gains against the low yielding Swiss franc and Yen as investors moved into higher yielding assets. As a result, the New Zealand and Australian dollar were the only currencies to advance against the greenback, while the Canadian dollar failed to follow its currency partners amid a rise in commodity prices. The US dollar also rallied against the European currencies as the euro dipped to 1.541, while the British Pound inched lower to trade in the 1.973 range.
Fresh economic data supported the US dollar rally as labor conditions marked a surprising improvement, with growth prospects improving as export demands remain resilient. The Non-Farm Payroll index came in much better than what the markets had expected as it was released at -20K against forecasts for a -75K reading due to heightened growth in the services sector. As a result, the Unemployment Rate dropped to 5.0 percent from 5.1 percent, with Manufacturing Payrolls also reflecting an improvement as it rose to -46K from -48K. The Factory Orders index added to the improved outlook as the index surged to 1.4 percent from minus 0.9 percent due to a rise in export demands.
Improved economic data fostered early morning gains in the securities market, but failed to hold its ground as investors sold off their securities to round up profits. As a result, the DJIA picked up 48.20 points to hold off at 13,058.20 points after rising above 13,100 early on in the session, with 22 of the 30 components advancing. Among the broader indices, the S&P500 rose 4.56 points to 1,413.90, with 148 stocks rising to a new 52 week high.
Demands for US Treasuries wavered as the stock markets continued to advance, and led investors to raise their risk appetite as they sought after higher returns. As a result, the benchmark 10-Year yield jumped to 3.859 percent from 3.769 percent, while the 2-Year yield jumped to 2.457 percent from 2.375 percent.
Looking ahead, the ISM Non-Manufacturing Composite will be the main event risk for Monday as we forecast the index to inch lower to 49.5 from 49.6, while our focus will move away from the US on Tuesday as the RBA will announce their rate decision at 4:30 GMT. The BoE and ECB will also meet next week to set rates, with both central banks expected to hold the current interest rate as both countries faced downside growth risks paired with inflationary concerns.