The US dollar continued its downward correction as it slid to just below 114 yen (session lows) and the euro challenged the 1.2485 level. The pound also managed to climb above the 1.59 mark.
The main excuse for this wave of profit-taking was that the headline number for the nonfarm payrolls had missed estimates as it came in at 214 thousand versus 231 expected. However, this still represented a labor market that was improving and the unemployment rate had dipped to 5.8%. Although the payrolls number was not something that ought to worry dollar bulls, something that should concern them was the fact that speculative dollar longs had built up to the highest level in 6 years. This kind of excessive speculative positions could present a problem for the dollar, even if fundamentals do generally come in strong. The trend of a stronger dollar is still there, but traders who would like to buy the dollar better do it on pullbacks or on relative weakness rather than to try to jump ahead before it heads higher because this level of speculative position build-up suggests there could be significant corrections.
The Australian dollar also took advantage of the US dollar’s weakness to pull higher from 0.8540 4-year low and to trade above 86 cents. The aussie was helped a little by a forecast-beating Chinese export growth figure for October which was announced on Saturday. Imports missed expectations, which resulted in a larger-than-expected trade balance.