Nonfarm Payrolls during November were 199k, outpacing the 185k estimate. Private Payrolls were 150k, below the 159k estimate, and Manufacturing Payrolls were 28k, below the 30k estimate. The Unemployment Rate dropped to 3.7% from the October 3.9% reading.

The USD strengthened immediately following the payrolls numbers but has since retreated from the day’s highs. Notable dollar gains compared to yesterday’s close: 0.56% vs. GBP, 0.48% vs. EUR, 0.42% vs. AUD, and 0.29% vs. JPY. The dollar index is 0.44% today (at 104.006) and 0.53% for the week.

On Thursday Bank of Japan officials hinted that they could be nearing a shift away from negative interest rates, sparking a JPY rally. USD/JPY experienced an intraday ‘flash-crash’, dropping 1.58% in minutes as long dollar positions were frantically unwound once the pair traded below 144.00, eventually touching a 141.70 low. Yesterday’s high/low range was 3.80%, extraordinary currency volatility.

The U.S. yield curve is higher today following the strong payroll number. The biggest gains are in the near end of the curve: 2y 0.093%, 3y 0.091%, 4y 0.089%, and 5y 0.083%.

Next week’s economic calendar has several key scheduled releases: CPI on Tuesday and PPI on Wednesday. But the primary focus will be the FOMC’s rate decision announcement on Wednesday at 2pm ET and Fed Chairman Powell’s policy address at 2:30pm ET.

The dollar has started the week on a strong footing, gaining against all G10 currencies and most major currencies. The dollar’s G10 gains are bookended with 1.20% vs. NOK and 0.03% vs. JPY. Other notable gains: 0.63% vs. GBP, 0.61% vs. AUD, and 0.49% vs. EUR.

The dollar’s performance is aligned with U.S. Treasury yields which have also moved higher today. Yields are higher in all tenors with the middle curve dates rising the most: 2yr 0.93%, 3yr 0.96%, 4yr 0.92%, 5yr 0.09%, and 10yr 0.075%. Fed Funds Futures imply an 81% probability of a 25 basis-point cut at the FOMC’s September meeting, and the Overnight Rate 4.4% by then (down from the current 5.335% implied rate).

Bitcoin is making a move today, 7.22% at $41,593 ( 10.19% over 4 days), its highest mark since April of 2022 and is 151.48% this year.

Economic data this week is dominated Friday’s Nonfarm Payrolls for November. Recall that it was last month’s Nonfarm payrolls surprise decline (150k vs. 180k estimate) that sparked November’s dollar selloff. Traders, wary of a repeat, may set the tone for a weaker dollar leading up to Friday’s data.

The Bank of Canada will announce its latest Rate Decision on Wednesday, the expectation for no change at 5%.

Gold spiked to $2,135.39 overnight (a 3.11% increase over Friday’s close), its highest price ever. It has since retraced and is now -1.25% for the day but still positive for the month.

The benchmark 10-year U.S. Treasury yield reached a 3-month low today at 4.249% and is currently down 62 basis-points during November. October’s high at 4.992% (a 16-year record) combined with November’s steep decline looks like the beginning formation of a technical reversal. The 20- and 30-year yields have seen similar declines near 60 basis-points. The U.S. Treasury yield curve has flattened significantly during November with yields lower in all tenors.

Fed Funds Futures continue to imply an increasing probability of cuts in the Fed’s overnight rate beginning next year. The chance of a 25-basis point cut at the FOMC’s March meeting is 45% and increases to 75% by September.

The USD is higher today vs. most G10 currencies following the release of 3^rd quarter GDP at 5.2%, above the 5.0% estimate. Primary dollar gains vs. the majors hint at a shift to ‘risk off’: 0.55% vs. BRL, 0.48% vs. AUD, 0.44% vs. SEK, 0.43% vs. NOK, and 0.35% vs. MXN.

Gold is -0.08% today after reaching a fresh 6-month high at $2,051.89/oz. earlier in the trading session. Gold’s Oct-Nov gain of 10.33% rivals equity gains over the same time span, i.e. SP500 Index is 6.22%.

Third quarter Personal Consumption reported today was 3.6%, below the 4.0% forecast.

The dollar’s swift November decline has continued today, leading to a 0.14% drop in the U.S. dollar index which is on track to revisit its monthly low at 103.178. The DXY is -3.16% since October’s close at 106.66, the dollar’s highest monthly mark in a year. Support is near 102.00 and lower at 99.50.

The USD is lower against all G10 currencies, with losses ranging from -0.62% vs. NOK to -0.02% vs. CAD. The dollar’s top 10 losses against the major pairs during November: -7.24% vs. SEK, -5.94% vs. MXN, -4.81% vs. NOK, -4.29% vs. AUD, -3.91% vs. GBP, -3.59% vs. KRW, -3.57% vs. EUR, -3.44% VS. CHF, -3.30% vs. BRL, and -2.76% vs. TWD.

The U.S. Treasury yield curve has significantly flattened this month, seen primarily in the long-term tenors (5yr-30yr) which have declined nearly 50 basis-points on average. Lower yields have driven a move to ‘risk’ assets, lifting equities such as the S&P500 Index by 10.73% since the October 27^th low and the Nasdaq100 Index by 12.70% over the same period.

The price of gold reached $2,018.21/oz. today, its highest since the May 16^th high at $2,018.38.

Economic data releases for the week include today’s New Home Sales for October (-5.0% est.), tomorrow’s Consumer Confidence, third quarter GDP on Wednesday, and Personal Income & Spending on Thursday.

The dollar index is -0.20% today and reached an overnight low of 103.178, finally breaking through September’s low of 103.272. Dollar daily losses include declines against all G10 pairs and most other major currencies. The dollar’s decline accelerated after last Tuesday’s surprise CPI data which showed consumer inflation reaching a 16-month low. The dollar’s results since the CPI data:

-2.16% vs. NOK

-1.87% vs. JPY

-1.81% vs. SEK

-1.36% vs. MXN

-1.07% vs. NZD

-1.03% vs. AUD

-0.71% vs. CHF

-0.67% vs. EUR

-0.38% vs. GBP

U.S. Treasury yields have moved lower in unison with the dollar. The 10-year yield is 4.409% today after starting the month at 4.897%. Fed Funds Futures currently imply a greater than 50% probability of a series of Fed rate cuts beginning with the FOMC’s June 2024 rate policy meeting.

Gold is 1.12% at $1,999.39/oz, continuing the rally from its $1,931.55 low earlier in the month and approaching October’s $2,009.29/oz high.

Canadian CPI date released today was in line with survey estimates: 0.1% MoM ( 0.1% est.), and 3.1% YoY ( 3.1% est.). USD/CAD is little unchanged, -0.17% in trading today.

The USD was mixed in overnight trading against the major pairs with the balance tipping towards dollar weakness. The dollar index is -0.11% today, a welcome respite after yesterday’s volatile 1.51% drop, its second >1% daily drop this month, and at 104.08, is trading at a two-month low.

Yesterday’s lower-than-expected CPI data for October was the catalyst for the dollar’s selloff. Month-over-month CPI was reported 0.0%, below the 0.1% estimate and its lowest mark in 16 months (July of 2022). Year-over-year CPI was 3.2%, below the 3.3% estimate and the lowest reading since March. U.S. economic data has turned a corner this month, starting with Nonfarm payrolls surprise drop to 150k on Nov 3^rd, followed by Friday’s Consumer Confidence dropping to 60.4 (63.7 estimate), and yesterday’s CPI. Add to this today’s PPI (producer prices data) for October which was below estimates in five of the six categories, and it seems clear that Fed rate policy is becoming a meaningful headwind for the U.S. economy.

U.S. Treasury yields are slightly higher today, a minor retracement from yesterday's data-driven selloff. The 10-year yield is 4.50%, its lowest since September 22^nd and nearly 50bps below the October high of 4.99%.

All the major global equity indexes are higher today, building on yesterday’s rally. Weakening U.S. economic data lessens the likelihood of another Fed rate hike, a bullish scenario for business owners.

Fed Funds Futures are now implying 0% chance of another Fed rate hike at any of the FOMC’s meetings through the end of next year. Before yesterday’s CPI data there was still a small likelihood of a hike at either the December or January rate policy meetings, but that has been replaced with the expectation of a series of rate cuts beginning with the FOMC’s March meeting.

Oil is lower by 0.88% today and is -3.34% YTD. Gold is 0.04% at $1,963.85/oz and is 7.74% YTD.

Currencies were rangebound overnight with traders sidelined ahead of Fed Chairman Powell’s speech to the IMF today at 2pm ET. The U.S. Dollar Index is -0.06% with USD mixed against the major pairs: 0.14% vs. GBP, 0.10% vs. CHF, -0.42% vs. NZD, -0.31% vs. NOK, -0.28% vs. SEK, and -0.14% vs. AUD.

U.S. Treasury yields ticked higher the long tenors, 25-year 0.079% and 30-year 0.082%.

Weekly Initial Jobless Claims for the week ending Nov 4^th were 217k, just below the 218k estimate. The previous week’s claims were revised up by 3k to 220k. The highest weekly jobless claims tally for 2023 was 265k in mid-June and the lowest was 194k in mid-January.

Oil prices are 1.31% today, the first gain following 4 consecutive daily declines.

U.S. Equity Indexes are trading fractionally higher with the S&P leading gains 0.278%.

The dollar is higher for the third consecutive day, lifting the Dollar Index by 0.26% to trade at 105.814. Despite the three days of gains, the dollar has still not fully recovered from Friday’s 1.04% decline that was sparked by October’s Nonfarm Payrolls surprise drop.

The dollar’s upside potential looks limited by overhanging near resistance near 106.25 and higher at 107.00. Dollar bears will likely use the dollar’s rally to initiate short dollar positions at more favorable levels.

Dollar gains are led by a 0.40% advance vs. JPY, lifting the USDJPY to a 6-day high and bringing it within striking distance of a new multi-year high. The dollar is 0.34% vs. EUR, 0.33% vs. GBP, 0.25% vs. NZD, and several sub-0.25% gains vs. the remaining G10 currencies.

U.S. Treasury yields are fractionally higher in the mid-curve tenors. Fed Chairman Powell is scheduled to speak at 9:15am ET and traders are hedging against the possibility of Powell pushing back hopes of mid-2024 rate cuts.

Oil is lower by 0.78% today and is now -15.39% since the October 20 high at $90.78/barrel.

The average 30-year fixed mortgage rate has dropped to 7.61%, its lowest level since late September after peaking at 8.09% on October 25^th.

The dollar is higher today against the G10 pairs, rebounding from three consecutive daily losses. The U.S. dollar index is 0.42%, trading at 105.65. Significant resistance between 106.50 and 107.25 will prevent (or at least slow) the dollar’s advance, with bears viewing dollar gains as an opportunity to short the U.S. unit at more favorable levels.

The dollar’s primary gains today are 1.16% vs. AUD, 0.75% vs. NZD, 0.42% vs. EUR, and 0.37% vs. GBP & CAD.

At 1.0688 the EUR/USD has now reversed 50% of its Nonfarm Payrolls rally from Friday. The GBP/USD is in a similar position, having given back more than 50% of its payrolls rally to 1.2428. Both the EUR/USD and GBP/USD monthly charts show what could be the beginning of a reversal pattern, suggesting dollar weakness on the horizon.

U.S. Treasury yields are lower in the 4yr-30yr tenors with the biggest declines in the far dates. Fed Funds Futures currently imply a 45% probability of a 25 basis-point cut at the FOMC’s May 2024 meeting and a 54% chance of a 25bp rate cut at the June 2024 meeting.

Gold prices are -0.61% today, trading at $1,965.89/oz, and -2.16% from its Oct 27 high ($2,009.29). Silver is -1.79% at $22.60/oz.

Equity indexes are a mix of minor gains and losses in directionless trading.