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Dollar’s Reaction to Payrolls Should Last
The dollar surged after the non-farm payrolls report because job growth excluding census workers was very strong.
With the absence of U.S. equity traders, we did not see the risk rally that tends to occur near the U.S. equity market open. Based upon how the dollar traded after the NFP report in April 2007, there is good chance that the current trend in the dollar will last. Volatility should settle by the London close and the move that we see today should continue on Monday.
The following chart shows how the EUR/USD performed on April 6, 2007 and how the move continued the following Monday. For a chart on how the EUR/USD traded on NFP day on April 6, 2007, read my prior NFP post.