Much Better than Expected Jobs Data, Dollar Bid

The US jobs data headline, details and Sept revision were better than expected and although the unemployment rate remains stubbornly high, the take away is net constructive and caps a week in which the US data has generally been better than expected.

The US grew 151k jobs in Oct after a 41k decline in Sept was initially -95k). Private sector employment rose 159k, twice the recent average. In addition, the work week increased 0.1%, which is equivalent in output to another 200k+ workers. Output is a function of hours worked and productivity. The hours worked index rose 0.4%, which bodes well for Q4 GDP.

The dollar was bid prior to the release and oon the data the dollar has continued to advance. Key support for the euro is near $1.3980-$1.40. Note that the 2 year US-German spread has also moved in US favor. The high for the week in the dollar vs the yen is was set on Wed near JPY81.60. A move above here gives near-term potential to JPY82 which has capped dollar upticks in recent weeks. Sterling support is seen near $1.6120.

There remains the ruisk that the combination of strong data coupled with QEII encourages risk taking and preference for risk assets which may see dollar gains pared.