It was another big week for global markets as we opened Q3 as the global bound rout continued. With growth numbers in Europe remaining relatively strong, markets are continuing to try to front-run an inevitable stimulus exit from the European Central Bank; and this continued to show throughout the week as the Euro continued to strengthen.

Non-Farm Payrolls was released this morning with a hearty beat above the expectation of +178k. The print came-in at +222k, but we also saw the unemployment rate rise to 4.4% from a prior 4.3%. Perhaps more disconcerting, wage growth remains weak, and given that inflation has been a major push point for the Fed, this lag in wage growth continues to highlight the soft data that’s been seen in the United States of recent, even with this morning’s headline beat.

The reaction across FX markets was far more interesting than the data itself as many of the markets that we’ve been following around the theme of the ‘global bond rout’ gained a bit of additional confirmation, which we will discuss below. But before we get there, we wanted to highlight the fact that next week brings an extended outlay of Janet Yellen comments on Wednesday and Thursday when the Fed Chair testifies in front of Congress as part of the Fed’s twice-annual Humphrey Hawkins testimony. This event may not be the burgeoning driver of risk trends that many are looking for, but given that the topic of balance sheet reduction appears to be a hot button, we will likely see Chair Yellen grilled on the topic next week. This can certainly illicit some volatility across global markets, and we only need to look back to 15 months ago when Chair Yellen helped to produce a jaw-dropping reversal in Equities and Oil prices during her Humphrey Hawkins testimony in February of 2016.

So – the U.S. Dollar will likely remain volatile next week. We will probably see some degree of positioning as we near the first part of that testimony on Wednesday at 10AM. As it stands now, the U.S. Dollar is incredibly weak as prices remain near the bottom of the bearish channel that’s defined price action in the Greenback so far in 2017.