USD is rallying even though forecasts of Fed futures are not back to where there were recently

•     Nonfarm payrolls beat expectations = good news for USD

–    248k vs expected 215k

–    July, August & Sep average = 224k vs 228k in first half = no slowdown in hiring

–    But hourly earnings rose only slightly, participation rate fell = there are still points that the FOMC’s doves can worry about

•     USD is rallying even though forecasts of Fed futures are not back to where there were recently

–    Suggests something besides interest rate differentials is also driving the market

–    Commitment of Traders report suggests that corporate hedging and real money investors are behind the dollar’s rise. Suggests it is sustainable

•     Today:

–    Eurozone: German factory orders expected to fall in August

•     This week:  RBA, BoJ, BoE meetings

–    No rate changes expected. For RBA (Tue), we look for comments on the currency. BoJ (Tue) expected to keep to its existing view. BoE (Thur) should be a non-event, as usual

–    Minutes of recent FOMC meeting coming out on Wednesday. We can find out why they left in the “considerable period” phrase