Forex Today: NFP-driven rally gives way to a US Dollar retreat

What is in focus for markets on Monday, 9 November?

The US Dollar (USD) comes under pressure early on Monday, reversing some of the strength seen towards the close of last week. On the European economic calendar, November's Sentix Investors Confidence data is due, followed later in the day by speeches from several Federal Reserve (Fed) policymakers. Market volatility could pick up on Tuesday when the US releases its October Consumer Price Index data.

Friday's US employment report showed a 165K rise in October Nonfarm Payrolls (NFP), according to the US Bureau of Labor Statistics. The increase comfortably exceeded the market forecast of 65K and followed September's gain of 60K, revised from 29K. The Unemployment Rate fell from 4.2% to 4.1% over the period, alongside an improvement in the Labor Force Participation Rate from 61.8% to 61.9%. Responding immediately to the strong labour market figures, the USD Index picked up momentum and advanced about 0.7% for the day. During Monday's European morning session, the USD Index is retreating, although it remains just above 102.00.

A more positive risk mood at the start of the week appears to be limiting the USD's ability to extend its outperformance against other currencies. According to CNN, US President Donald Trump said fresh attacks on Iran were “highly unlikely” if negotiations to end the conflict kept progressing. A meeting between Trump and Qatar's Prime Minister is expected later in the day, with a new ceasefire and the resumption of nuclear talks on the agenda. Separately, Saudi Arabia reported that falling debris from an attempted attack had damaged a Saudi Aramco administrative building in Riyadh. The Saudi-led coalition also claimed it had intercepted two ballistic missiles and two cruise missiles aimed at the kingdom. Early on Monday, oil prices are easing, with West Texas Intermediate down about 1% per barrel on the day.

US stock index futures are trading higher as market sentiment improves. At the time of publication, Dow Futures lead the advance with a gain of 0.7% for the day.

EUR/USD surrendered its weekly gains with a decline of nearly 0.7% on Friday. The pair is holding on to a modest recovery above 1.1150 early on Monday.

Gold ended the week nearly 5% higher despite Friday's decline. As the new week begins, the metal is finding support and trading above $4,100, a gain of about 1% on the day.

Is Gold’s resilience signalling a return of safe-haven demand?

For OCBC analysts, Gold's recent performance stands out: they describe “Gold’s relative resilience despite the sharp equity selloff” as “encouraging.” After the recent price correction and the scaling back of speculative positions, their view is that “Gold may be gradually regaining some of its safe-haven appeal, potentially providing shelter amid turbulence elsewhere in financial markets.” The bank nevertheless warns that “the extent to which Gold can hold up if equity weakness persists will be an important test,” indicating that the staying power of this renewed safe-haven demand will depend on the performance of risk assets in the coming days.

GBP/USD is recovering more strongly towards 1.3400 early on Monday, following two consecutive sessions of losses. Bank of England Governor Andrew Bailey is due to speak later in the day at the Swiss Institute of International Studies Lecture Series and Dinner, hosted at the University of Zurich in Switzerland.

USD/JPY finished last week higher after advancing about 0.5% on Friday. In the European morning session, however, the pair is losing ground towards 158.00.