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Dollar drops after U.S. jobs report chills rally

The dollar lost out to the euro after Friday’s U.S. jobs report suggested that some traders may have over-played a stronger American recovery from the coronavirus pandemic.

The euro rose 0.7% to $1.2042 in its biggest daily gain in more than two months after the report, which Marc Chandler, strategist at Bannockburn Global Forex, said did more to force short-term traders to adjust long-dollar and short-euro positions than it changed the economic outlook for a U.S. recovery that is stronger than peers.

The dollar index of a basket of currencies was down 0.5% at 91.028, but still holding a weekly gain of 0.6%.

“This forces some of the late dollar-longs out,” Chandler said. “It doesn’t really change what to expect for Q1 GDP in the U.S. Market positioning is a different story.”

The report showed U.S. employment growth rebounded less than expected in January and job losses the prior month were deeper than initially thought, strengthening the argument for additional relief money to aid the recovery from the COVID-19 pandemic.

The greenback was off 0.1% against the yen at 105.42.

U.S. Treasury yields rise as unemployment rate dips

U.S. government debt prices rose on Friday morning as the monthly jobs report showed that the unemployment rate ticked down in January.

At around 4:00 p.m. ET, the yield on the benchmark 10-year Treasury note was higher at 1.15%, while the yield on the 30-year Treasury bond was also higher at 1.95%. Yields move inversely to prices.

Reference: CNBC