US jobs data beat sparks dollar volatility, yen intervention suspected

• WTI crude oil fell $0.01, closing at $91.30.
• US 10-year Treasury yields slipped 1.8 basis points to 4.78%.
• Gold dropped $39, ending at $4433.
• The Australian dollar outperformed, while the Japanese yen lagged.
• The S&P 500 index declined 0.4%.

The US and Canadian employment reports took center stage, and they moved in opposite directions—the US posted a strong beat while Canada missed, a reversal from the previous month. The US dollar popped higher on the non-farm payrolls release, gaining roughly 35 pips across the board, but those initial moves proved to be the day's extremes.

The report came with the usual caveats—education and hospitality sectors accounted for much of the gains—but overall it was still a solid number. The dollar's subsequent pullback was driven more by Federal Reserve considerations, as Governor Waller had said the day before that the jobs data would not heavily influence his views. Nonetheless, market pricing for a rate hike rose to 58% from 49%, and short-term yields climbed 4 basis points.

The yen stayed in the spotlight, with fresh indications of intervention after the pair dropped over 200 pips from its post-NFP peak. Having hit 155.40, USD/JPY steadily recovered to 156.26, ending the session roughly 50 pips higher. The month has begun with considerable volatility for the currency pair.

USD/CAD saw significant movement due to the contrasting jobs data. The pair climbed to 1.3871 at its high before surrendering 35 pips as the dollar weakened broadly. The Bank of Canada will have one more employment report to examine before its next policy decision.

Following the jobs data, the news spotlight shifted to Iran. Several reports mentioned ballistic missile launches, but former President Trump later stated there was no shooting, leaving observers puzzled. Oil had dropped to $89.00 before reversing course to close at $91.34, partly due to those headlines but mainly because of long weekend positioning.