US payrolls disappoint yet Fed officals calling for Nov? - Westpac

Analysts at Westpac offered a market wrap.

Key Quotes:

"Global market sentiment: A slightly disappointing US payrolls report hurt the US dollar and sent interest rates slightly lower. Markets were volatile following GBP’s earlier flash crash.

Interest rates: US 10yr treasury yields initially fell from 0.75% to 0.72% in response to the US payrolls report, then recovered to 0.76% after some hawkish Fedspeak, but fell again to close at 1.71%. The 2yr was also volatile, but closed lower at 0.83%.

FOMC VC Fischer sounded upbeat, describing the payrolls result as “Goldilocks”. Hawks Mester and George predictably called for hikes as soon as November.  

Currencies:  The US dollar index is slightly lower on the day. EUR rose from 1.1110 to 1.1205, mostly fuelled by the US jobs report. USD/JPY fell from 104.00 to 102.86. GBP stabilised after the earlier flash crash which sent it from 1.2620 to 1.1841 (Bloomberg), trading sideways mostly around the mid-1.24s. AUD was initially boosted by the US jobs data, from 0.7575 to 0.7623, but later dipped to 0.7553 before closing at 0.7594. NZD similarly fluctuated between 0.7110 and 0.7200, closing slightly higher at 0.7171. AUD/NZD fell from 1.0638 to 1.0580.

CFTC’s weekly report on non-commercial positioning showed DXY longs and EUR shorts remained intact, GBP shorts and JPY longs were at record levels, AUD longs increased and NZD shorts were little changed."