Dollar back to square one after payrolls – UBS

Investing.com – The US dollar received a boost from the release of Friday’s stronger-than-expected nonfarm payrolls, but UBS sees this just moving the US currency back to square one.

“Last Friday’s NFP surprise shifted US front-end yields significantly higher which translates into a bounce in estimated USD fair value across our short-term models,” analysts at UBS said, in a note dated Oct. 7.

“What’s notable is that spot price action has tracked the shift in the relative Fed, ECB and BoJ expectations fairly accurately over the past week: as a result there are no significant model dislocations at the moment.”

The only exception is USD/CAD, the Swiss bank added, where fair value at 1.3720 is more than 1.5 standard deviations above Friday’s spot close. 

The Canadian dollar’s beta to oil has been very low, which is why the model is reacting to higher US yields much more than a bounce in crude prices. 

The Aussie dollar was the only currency that saw a (marginal) uptick in fair value against the USD last week which suggests that absent an adverse move in equities, the downside should remain somewhat limited.

Additionally, CFTC positioning data reported through last Tuesday suggest leveraged funds were wrong-footed by the payrolls release as early last week they turned net long yen for the first time since February 202, UBS said.

Adding the fact that asset managers had already been long yen since August helps explain why JPY has underperformed since the payrolls data. 

Another interesting development is that leveraged funds have turned net long AUD for the first time since early July and by the largest amount since August 2023 presumably in reaction to news of China stimulus. 

Asset managers remain short AUD but the size of that position is less than 10% of the 2024 peak. Elsewhere, leveraged funds remain long GBP, short CAD and flat EUR.

This post is originally published on INVESTING.

  • Related Posts

    Oil falls after Trump reverses Colombia sanctions threat

    By Anna Hirtenstein LONDON (Reuters) -Oil prices wavered on Monday after the U.S. and Colombia reached a deal on deportations, reducing immediate concern over oil supply disruptions but keeping traders…

    Dollar gains on tariffs fears; euro looks to ECB meeting

    Investing.com – The US dollar slipped lower Monday, rebounding after recent losses as attention returned to the potential for trade tariffs from the Trump administration at the start of a…

    Leave a Reply

    Your email address will not be published. Required fields are marked *

    You Missed

    Singapore’s Straits Financial Taps FX Trading Tech Provider Integral for Gold Trading Operations

    • June 11, 2025
    Singapore’s Straits Financial Taps FX Trading Tech Provider Integral for Gold Trading Operations

    Is Quantum Computing at an Inflection Point? Nvidia CEO Says

    • June 11, 2025
    Is Quantum Computing at an Inflection Point? Nvidia CEO Says

    What Happens When You Start Risking Too Little in Forex?

    • June 11, 2025
    What Happens When You Start Risking Too Little in Forex?

    From CFDs to Futures: Plus500 Extends US Reach with Barchart Partnership

    • June 11, 2025
    From CFDs to Futures: Plus500 Extends US Reach with Barchart Partnership