dxy update

The U.S. Dollar is sharply higher against a basket of major currencies at the mid-session on Friday, following a similar move in U.S. Treasury yields, after jobs data came in much hotter than expected.

Nonfarm payrolls increased by 517,000 for January, notably above the 187,000 additions estimated by Dow Jones. Additionally, the unemployment rate fell to 3.4%, lower than the 3.6% expected by Dow Jones.

Ahead of the jobs report, traders were betting the Fed would end its rate hiking campaign in March with rates peaking below 5%. Traders are now pricing in the Fed’s policy rate to peak at 5.03% in June, up from 4.88% on Thursday afternoon.

The rally in the U.S. Dollar is reflecting the jump in expectations for the Fed’s terminal rate.
please see my big picture as below

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jobless claims have remained low despite high-profile layoffs in the technology industry as well as the interest rate-sensitive finance and housing sectors. There is anecdotal evidence that companies are generally reluctant to lay off workers after experiencing difficulties during the pandemic, according to Reuters.

Workers remain scarce in some industries. There were 1.9 openings for every unemployed person in December, government data showed last week. According to an institute for Supply Management survey last Friday, some services businesses in January reported they were “unable to hire qualified labor,” saying that “supply is thin,” Reuters added.