Dollar softer post ‘payrolls’

The euro and sterling have both advanced against the dollar following the release of the latest employment report in the US on Friday, strengthening to well over $0.99 and north of $1.13 respectively and leaving the single currency-pound exchange rate hovering a touch below 88p

Government bond yields rose over the course of last week and are nudging higher at the start of play this week as well, with US and German 10-year yields up to 4.15% and 2.30% respectively and equivalent UK yields at 3.55%

Employment in the US rose by 261,000 in October according to Friday’s ‘payrolls’ report, slightly less than the 315k increase in September, while the unemployment rate nudged up to 3.7% and the annual rate of growth in hourly earnings moderated to 4.7% from 5.0% in September (and has now fallen by almost 1 percentage point from its peak of 5.6% in March this year)

Fed member Barkin says the central bank “needs to get inflation down to target, and we need to do whatever we need to do with (interest) rates to get inflation back to target”, adding that it’s “entirely conceivable” that rates “would end up above 5%”

ECB’s Villeroy says “as long as underlying inflation has not clearly peaked, we shouldn’t stop on (interest) rates”  – the underlying rate of inflation (i.e. excluding energy and food prices) in the zone rose to a new record high of 5% in October

Economic data due this week include CPI inflation in the US on Thursday and third quarter GDP in the UK on Friday, while the European Commission publishes its latest economic forecasts at the end of the week too