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    Asian Session – Profit-taking by dollar bulls following massive post-employment report gains

    The dollar eased back following significant gains on Friday, as traders decided to take some profits after the dollar’s move. The euro climbed back versus the dollar at 1.0763 compared to the low of 1.0705 that was hit on Friday, while sterling also tried to move back towards 1.51 following a low of 1.5026. The pound was last buying 1.5077 dollars. The aussie and the kiwi also moved higher against the US dollar. The exception to the general theme of dollar profit-taking was dollar / yen, as the cross continued to advance towards 123.50 (123.38 latest).

    Monday’s session was mostly quiet as the only piece of news was Japanese cash earnings (slightly higher than expected) and German trade balance for September (narrower surplus than expected). On Sunday, Chinese trade figures showed both exports as well as imports falling substantially, which pointed to weak demand both at home and abroad for China. The end result was a somewhat lower-than-expected trade surplus.

    The market of course was still grappling with the aftermath of the nonfarm payrolls report released on Friday. For many analysts, a rate hike by the Federal Reserve is all but certain during its December meeting, as the data calmed fears that the US labor market was slowing down. An important measure of short-term interest rates, the US 2-year treasury yield, jumped to its highest in more than 5 years.

    Looking ahead, the Eurozone Sentix investor confidence index could provide some interesting insights, while later Canadian housing starts and a speech by the Fed’s Rosengren could also attract attention. For the remainder of the week, Chinese inflation tomorrow will be followed by employment data for the UK on Wednesday and Australia on Thursday. The week will finish with some major news on Friday, as Eurozone 3rd quarter GDP growth and US retail sales for October will provide valuable insights for euro and dollar traders.

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