The dollar was initially higher following the September labor report, rallying to 1.4481 against the euro and 1.5806 versus the pound sterling before relinquishing its earlier gains by the New York afternoon. US equities also recovered from its losses in the morning session, clawing their way back into positive territory, with the Dow Jones and Nasdaq up marginally.
Although the September unemployment rate was on par with consensus estimates, the reading still touched a fresh 26-year high at 9.8% versus August at 9.7%. The most disheartening component of the labor data was the non-farm payrolls report, which defied expectations for an improvement to a loss of 180k jobs, instead revealing a considerably larger loss of 263k jobs for September compared with a revised 201k jobs shed in the previous month. Meanwhile, average earnings edged up by less than anticipated, increasing by 0.1% compared with an upwardly revised reading of 0.4% in August and average workweek drifted lower to 33.0 hours from 33.1 hours.
The economic calendar for Friday also included durable goods orders and factory orders. The headline durable goods report declined by 2.6% in August, deteriorating further from the prior month's 2.4% decline while core durable goods orders fell by 0.3% versus a flat reading previously. Factory orders fell by 0.8% for August, missing estimates for an increase of 0.3% from 1.3% in July.
Euro Regains Footing
The euro bounced back from its sharp sell-off to recover near the 1.46-level. Following the release of the non-farm payrolls figure, the euro sold off sharply against the dollar and yen, plunging by over 80-pips against the dollar to 1.4478 and losing over 100-pips versus the yen to 129.00.
EURUSD will encounter interim resistance at 1.46, followed by 1.4630 and 1.4670. Subsequent ceilings are eyed at 1.47, backed by 1.4740 and 1.4780. On the downside, support begins at 1.4540, followed by 1.45 and 1.4480. Additional losses will be tempered at 1.4450, backed by 1.44 and 1.4365.