US Dollar Extends Rise as Liquidity Comes Back and Markets Absorb NFP Report

US Dollar, DXY, NFPs, Technical Analysis – Asia Pacific Market Open:

• US Dollar gained against its major counterparts on Monday
• Liquidity came back, allowing markets to fully digest NFPs
• DXY bounced off a key support zone, will momentum hold?

Asia-Pacific Market Briefing – Markets Fully Absorb NFP Print from Last Week

The US Dollar aimed higher against its major counterparts on Monday, extending a recent streak of cautious gains. Its performance could be traced back to Friday when another solid US non-farm payrolls report crossed the wires. During that time, Wall Street was offline for the Good Friday holiday, meaning the complete reaction wouldn’t be fulfilled until liquidity was restored over the past 24 hours.

236k jobs were added in March, slightly higher than the 230k consensus. This marked a slowdown from February’s revised 326k print. Meanwhile, the unemployment rate unexpectedly dipped to 3.5% instead of holding steady at 3.6%. This was while the labor force participation rate increased to 62.6% from 62.5%. That hinted that the economy was able to absorb the increase in workers without sacrificing a rise in unemployment.

The key takeaway from the jobs report was that another 25-basis point rate hike from the Federal Reserve is likely in the cards for May’s policy announcement. In response, Treasury yields have been rising since the jobs report. Still, Wall Street remained unperturbed. By the end of Monday, the Dow Jones and S&P 500 finished higher. Meanwhile, the tech-heavy Nasdaq Composite was practically unchanged.

Looking to Tuesday’s Asia-Pacific trading session, the most prominent economic print on the docket is Chinese inflation figures (both CPI and PPI) for March. Given China’s recovery from its Covid-zero strategy, investors will be watching if these figures could show signs of rising price pressures, which could be indicative of an accelerating economy.

US Dollar Technical Analysis

Looking at the DXY Dollar Index, we can see that the greenback is aiming higher after prices turned just above the critical 101 – 101.29 support zone. This could open the door to extending gains, but the 100-day Simple Moving Average (SMA) remains above. It could hold as resistance, maintaining the downside focus (as it did on a couple of occasions in March).

DXY Daily Chart

Chart Created in TradingView

— Written by Daniel Dubrovsky, Senior Strategist for DailyFX.com

To contact Daniel, follow him on Twitter:@ddubrovskyFX