USD erased early losses after an unexpectedly strong US jobs report, rising for the first time in four sessions, as markets pushed back expectations of the Fed’s next rate cut from June to July. US payrolls increased 130,000, the most in over a year; while the unemployment rate fell, signalling job market stability. The USD Spot Index rose 0.3% post-report, reversing an earlier 0.4% drop in European hours.
AUD continued to put on gains following RBA Deputy Governor Hauser’s warning that inflation remains too high.
*Daily move - against G10 rates as of 17:00 GMT, 11.02.26
** Indicative rates - interbank rates as of 17:00 GMT, 11.02.26
Yesterday's strong US payrolls reinforced that the job market remains resilient, supporting USD and pushing back on expectations for near-term Fed rate cuts. Despite early weakness, the USD rebounded against most G-10 peers, while EURUSD and GBPUSD showed measured declines, reflecting cautious positioning and lingering market sensitivity to US data.
UK GDP came in lower than expected this morning at 0.1% for Q4. The modest move in GBP was only slightly above its average GDP-day reaction over the past year, highlighting how little weight markets place on backward-looking growth data. Attention now shifts to next week’s CPI print, the final inflation reading before the BoE’s March meeting. With around 18bps of easing priced, inflation is likely to have a far greater impact on rate expectations – and GBP – than today’s GDP miss.
Looking ahead, today's initial jobless claims will be closely watched for continued signs of job market trends following the strong payrolls, while Friday’s US CPI will be key for gauging inflation momentum and shaping expectations for Fed policy later this year. These events are likely to dictate near-term USD direction and broader G-10 FX flows.
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