USD/CHF fails to break key resistance around 0.9960 after NFP

•Non-farm payroll rise by 263K in September, in line with expectations. •US dollar rises across the board, as US yields soar. •USD/CHF jumps to test recent highs around 0.9950 and retreats. Boosted by a rally of the US dollar following the NFP, the USD/CHF pair rose to test the 0.9950/60 key resistance area and then pulled back. The pair hit a weekly high at 0.9953 and then retreat to 0.9915. The zone around 0.9950/60 continues to be a critical support that capped the upside last week and also on Friday. A consolidation above could trigger more gains for the dollar. While as long as it remains below, the Swiss franc could recover ground. The immediate support is seen at 0.9915 followed by 0.9875 and then the weekly low at 0.9780. After the report, US yields jumped with the 2-year approaching the top, near 4.35% and the 10-year hitting levels above 3.90%. The DXY jumped to 112.83, a fresh weekly high and then pulled back, trimming gains. It is up by just 0.25%, hovering around 112.50. NFP cooled in September, job market still strong The US Labor Department reported on Friday that the jobs in the US economy (Non-farm payrolls) rose by 263K in September, above estimates of 250K. The Unemployment Rate dropped unexpectedly from 3.7% to % to 3.5%. “The unemployment rate returned to a 50-year low of 3.5% through a combination of solid job growth and a roughly flat labor force. Wage growth moderated slightly but remains well above rates that are consistent with the Fed's 2% inflation target. We continue to look for the FOMC to hike its policy rate by 75 bps at its November meeting”, explained analysts at Wells Fargo. Despite Monday’s US holiday (Columbus Day), next week’s calendar is busy with the FOMC minutes on Wednesday, CPI on Thursday and retail sales on Friday. Those numbers will likely weigh on expectations about Fed’s monetary policy.

NZD/USD finds some support near 0.5600 mark, seems vulnerable amid bullish USD

•NZD/USD descends to a multi-day low amid the upbeat NFP-inspired modest USD strength. •The US economy added 263K jobs in September and the unemployment rate falls to 3.5%. •The data reaffirms Fed rate hike bets and favours the USD bulls amid the risk-off mood. The NZD/USD pair comes under some selling pressure during the early North American session and drops to a four-day low following the release of the US labour market data. The pair, however, recovers a few pips and is currently trading with modest intraday losses, just below mid-0.5600s. The US dollar hits a fresh weekly high in reaction to the upbeat US NFP report, which, in turn, exerts some downward pressure on the NZD/USD pair. The closely-watched jobs data showed that the unemployment rate unexpectedly fell to 3.5% in September from 3.7%. Furthermore, the US economy added more-than-anticipated, 263K new jobs during the reported month. The data lifted bets for another supersized 75 bps Fed rate hike move in November, which is evident from a fresh leg up in the US Treasury bond yields. This, along with the prevalent risk-off mood, is seen underpinning the safe-haven buck and driving flows away from the risk-sensitive kiwi. The NZD/USD pair, however, find some support near the 0.5600 mark. The lack of follow-through selling warrants some caution for bearish traders and before positioning for any further decline. That said, any meaningful recovery still seems elusive amid the prospects for a more aggressive policy tightening by the Fed. This, along with recession fears, suggests that the path of least resistance for the NZD/USD pair is to the downside.

US Dollar Index to see a final push stronger towards the 121.02 high of 2001

Economists at Credit Suisse stay core bullish on the US dollar and see scope for a potentially final push higher later on in the fourth quarter. USD rally is seen overdone near-term “The latest move to a new cycle high for the DXY has not been confirmed by weekly momentum, suggesting a trend that is tiring. Whilst we maintain our core and long-held bullish outlook, we think early Q4 can see a consolidation phase unfold, before a potentially final push stronger in the USD for a move to 118.37 in the DXY, potentially the 121.02 high of 2001.” “Good support is seen at 109.29 through to 107.68, which is a cluster of levels including the 55-day average, 23.6% retracement of the entire 2021/2022 uptrend and September low which we look to ideally prove a solid floor. Should weakness extend (not our base case), we would expect strong support next at 105.01/104.64.”

USD/CAD could reach 1.40 before falling back to 1.32 next year – CIBC

The Canadian dollar is set to see modest weakening in the fourth quarter as the Federal reserve outguns the Bank of Canada (BoC). But the loonie is expected to gain ground in 2023 as the USD falls out of favour, economists at CIBC Capital Markets report. CAD to weaken, before following the pack stronger in 2023 “The Fed’s hawkish announcement in late September and general risk aversion has sent the USD on a broadly stronger trajectory, and the loonie has depreciated as a result. There's likely more of the same to come, given a gap opening up in where policy rates will peak, and soft global growth favouring the USD and capping any upside for commodities.” “A run to 1.40 is quite possible, and a rebound at year end should still see CAD in 1.38 territory.” “In 2023, we see scope for a broad softening in the USD as the Fed pauses hiking below current market expectations, which will see CAD end the year stronger, with USD/CAD at 1.32.” “The loonie could still end 2024 stronger, with USD/CAD at 1.28, helped by expectations for a pickup in global growth and commodity prices in 2025 that would benefit Canada's export sector.”

EUR/USD rebounds from weekly lows, stays below 0.9800

•EUR/USD fell sharply with the initial reaction to US jobs report. •Nonfarm Payrolls in the US rose by 263K in September. •The pair remains on track to end the week little changed. EUR/USD managed to erase a large portion of its daily losses but lost its recovery momentum before reaching 0.9800. As of writing, the pair was down 0.1% on a daily basis at 0.9780. Following the latest price action, EUR/USD remains on track to end the week flat. Dollar capitalizes on upbeat NFP Earlier in the day, the data published by the US Bureau of Labor Statistics revealed that Nonfarm Payrolls rose by 263,000 in September. This print came in better than the market expectation for an increase of 250,000 and helped the dollar outperform its rivals. Additionally, the Unemployment Rate declined to 3.5% from 3.7%. With the initial reaction, the US Dollar Index (DXY) jumped to a daily high of 112.82 and forced EUR/USD to drop to a weekly low of 0.9726. Week-end flows and profit-taking, however, seem to be limiting the dollar's gains with the DXY retreating below 112.50 toward the London fix. Meanwhile, Wall Street's main indexes are trading deep in negative territory, making it difficult for EUR/USD to stretch higher. At the time of press, the Nasdaq Composite and the S&P 500 indexes were both losing more than 2% on the day.