(Bloomberg) -- The dollar was on track for its longest weekly winning streak in almost a year despite ending the week weighed down by concerns about North Korea.
The greenback was little changed late in the session Friday, relinquishing an almost 0.4 percent advance seen after the U.S. nonfarm payrolls report, amid concerns that North Korea might conduct a long-range missile test. The dollar was mixed versus G-10 peers. Its streak of four straight weekly gains marks the longest since late October 2016. U.S. Treasury yields pared an early advance and were on track to end the day slightly higher.
- The dollar saw steep gains after September's nonfarm payrolls report showed average hourly earnings rose by 0.5 percent m/m vs est. 0.3% and unemployment fell to 4.2% a 16-year low. Markets looked past the first decline in the headline number (-33k vs est. +80k) since 2010 as largely reflecting disruptions from hurricanes and saw the uptick in earnings as supportive for a Fed rate hike in December
- The greenback reversed its climb later in the session as a Russian lawmaker warned that North Korean officials were planning a new test of a missile capable of reaching the U.S.'s West Coast, as reported by RIA Novosti. Separately, NY Fed President Dudley said he continues to support gradual interest-rate increases despite weak inflation
- USD/JPY was trading ~112.71, down 0.1 percent, with the yen retracing its earlier losses amid haven demand. The pair rose as high as 113.44 following the U.S. data. Bids are near the Ichimoku conversion line of 112.47; standing stops are set below 112.00, according to NY-based traders, with offers near 113.50 and stops near 113.75
- EUR/USD was trading ~1.1733, reversing a loss to as low as 1.1670 after the jobs report. The euro was supported by option-related buying after large expiries. It has “immediate support” at its Aug. 17 low of 1.1662, Bipan Rai, FX and macro strategist at CIBC, said in an email. The rise in U.S. average hourly earnings, combined with regional Fed surveys and ISM numbers, signal a pickup in inflation in the coming months, Rai says
- “The USD move post the result shows that the markets are starting to take notice to a degree, though we still sense some complacency”
- Investors are continuing to monitor the situation in Catalonia. The Catalan president is expected to speak in front of the Spanish region's parliament in Barcelona at 6pm Tuesday, Europa Press reported. Meanwhile, Moody's says Catalan independence would have broadly negative credit implications for a wide range of bond issuers in Spain and the region
- USD/CAD was trading ~1.2530, lower by about 0.3%. The Canadian September employment report showed a gain of 10k jobs versus est. 12k; the unemployment rate was as expected at 6.2%
- Some information comes from foreign-exchange traders familiar with the transactions who asked not to be identified because they are not authorized to speak publicly
--With assistance from Maciej Onoszko
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To contact the reporters on this story: Alexandria Arnold in Seattle at abaca3@bloomberg.net, Lananh Nguyen in New York at lnguyen35@bloomberg.net, Robert Fullem in New York at rfullem5@bloomberg.net.
To contact the editors responsible for this story: Boris Korby at bkorby1@bloomberg.net, Greg Chang
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