Good morning. The dollar is edging lower even after yesterday’s stronger-than-expected jobs data drove a hawkish repricing in US growth and monetary policy expectations. Treasury yields are holding steady, North American equity indices are setting up for a mixed open, and most major currency pairs—including the Australian and Canadian dollars, the British pound, and the euro—are trading within tightly-defined ranges. January’s headline payrolls figure came in nearly double consensus forecasts and unemployment fell unexpectedly, reducing market-implied odds of an early rate cut, lifting 10-year yields and triggering a sharp dollar rally. The surface details looked positive: 130,000 new jobs against a 65,000 consensus, unemployment down to 4.3 percent from 4.4 percent, and wage growth accelerating to 0.4 percent. Yet the dollar’s gains proved fleeting. By the close, the greenback had fallen against a basket of major peers, suggesting investors were not comfortable abandoning...

• US data. US jobs report supported sentiment. This & ‘hawkish’ comments by RBA’s Hauser helped AUD outperform. AUD at levels last traded in Feb ’23.• Rate repricing. Markets factoring in another RBA hike by August. Relative interest rates are AUD supportive. But has it moved up too fast? Global Trends There was a more positive tone across markets overnight with better-than-expected US jobs data allaying fears about the state of the economy and supporting sentiment. While US equities retraced their initial positive reaction the S&P500 still recorded a modest gain (+0.1%). US bond yields rose with the larger jump at the front end of the curve (US 2yr yields +6bps) reflecting reduced US Fed rate cut expectations. Across commodities, base metals like copper (+1.1%) and energy prices (WTI crude oil +1.2%) increased, while in FX it was a more mixed picture. Once again, while the USD index ticked up thanks to some strength against the EUR (now ~$1.1870), GBP...

After slowing sharply over the last year, the US job creation engine showed signs of accelerating last month, frustrating market expectations for a rapid easing cycle from the Federal Reserve, and allaying fears of a dramatic slowdown in consumer spending. According to delayed data just released by the Bureau of Labor Statistics, 130,000 jobs were added in January—topping the 68,000-position consensus forecast—while the unemployment rate slid to a rounded 4.3 percent from 4.4 percent previously. Average hourly earnings climbed 0.4 percent month-over-month, jumping from the 0.1-percent pace set in the prior month, and rising 3.7percent in year-over-year terms. Revisions muddied the picture somewhat. Updates made to the November and December prints showed 17,000 fewer jobs were added than initially estimated, and a number of technical adjustments subtracted 862,000 roles over the year, bringing 2025’s average monthly job creation rate down to 15,000 from 49,000 previously—and well below...

The dollar is weakening and yields are nudging lower after US consumer spending surprisingly flatlined in December, underpinning expectations for more monetary easing in the months ahead. According to figures published by the Census Bureau this morning, total receipts at retail stores, online sellers and restaurants were little changed over the holidays after a 0.6 percent gain in November, and so-called “control group” retail sales—with gasoline, cars, food services, and building materials excluded—fell -0.1 percent, missing forecasts set at 0.4 percent. The US remains the global consumer of last resort—overall retail sales were still up 4 percent year-over-year in 2025, and import volumes have gone from strength to strength despite the ongoing noise from the White House—but it is clear that marginal spending growth is increasingly coming out of household savings, suggesting that momentum could slow further after tax refunds are paid out in the coming months. The dollar came under...

Treasury yields are climbing and the dollar is under pressure after Bloomberg reported that Chinese regulators have instructed the country’s commercial banks to cut their holdings of American government debt, noting threats posed by “concentration risks and market volatility”. According to the report, officials verbally advised financial institutions to reduce new purchases and scale down existing positions in recent weeks. Benchmark ten-year yields are up five basis points, and the trade-weighted dollar is down roughly half a percent. The policy shift is less dramatic than the headline suggests—implying that the kneejerk market reaction should fade—but is important nonetheless. Even when offshore custodial holdings are included, China’s official stockpile of Treasury instruments have fallen sharply over the last decade as the country has taken a less activist approach to currency intervention, and its banks have also lost market share, now controlling less than 1 percent of outstanding...

• Risk rebound. Strong recovery in US equities. USD lost ground. Backdrop pushed NZD & AUD higher. JPY still under pressure post weekend elections.• Data flow. RBA Deputy Gov speaks (Weds). US retail sales (Tues night), jobs report (Weds night), & CPI (Fri night) due. Several Fed members also speak. Global Trends There was a turnaround in market sentiment at the end of last week with cyclical assets (i.e. equities and copper) and growth linked currencies such as the AUD and NZD posting solid gains on Friday. After a few soft sessions related to concerns about AI disruption and the scale of tech sector capex, bargain hunters emerged helping US equities rebound strongly with the benchmark indices rising ~2-2.5%, the best daily performance since last May. It also helped the S&P500 claw back lost ground and almost end the week unchanged. Elsewhere, US bond yields ticked up ~1-3bps, copper (+2.4%) and gold (+3.2%) rose, and in FX the USD weakened a little. EUR (the major USD...