U.S. Dollar Rebounds 2% on Strong Job Openings Data

The U.S. dollar index experienced a rebound from its near two-year low close on Monday, driven by robust labor market data that indicated sustained demand for employment. The Job Openings and Labor Turnover Survey (JOLTS) data revealed that job openings increased to 7.39 million, surpassing the estimated 7.10 million. The hiring rate also reached its highest level in nearly a year, signaling a strong labor market. This data supported the dollar's technical rebound, which had been in an oversold condition, providing short-term support.

Elias Haddad, a senior strategist, noted that the April JOLTS data continued to reflect a stable labor market. This stability, coupled with the dollar's oversold status, suggested potential short-term gains for the currency. The one-week risk reversal indicator stood at approximately 36 basis points, indicating higher demand for put options over call options, a trend that has been ongoing recently.

The U.S. 2-year Treasury yield rose by about 2 basis points to 3.96%. As traders prepared for the Bank of Canada's decision, the Canadian dollar outperformed other G-10 currencies. The USD/CAD pair rose by less than 0.1% to 1.3719. The swap market indicated a 25% probability of a 25 basis point rate cut by the Bank of Canada. Analysts predicted that the Bank of Canada would maintain its interest rate at 2.75% but would also signal a dovish stance.

The EUR/USD pair fell by 0.6% to 1.1375, as inflation in the Eurozone slowed more than expected, falling below the 2% target. This provided a rationale for further rate cuts. The USD/JPY pair rose by 0.8% to 1.4388, with the one-month risk reversal also showing a recent upward trend but remaining bearish at approximately 168 basis points, indicating higher demand for put options over call options.

The Jibun Bank PMI data for May is scheduled to be released. The AUD/USD and NZD/USD pairs fell by 0.5% and 0.6% respectively, trading at 0.6465 and 0.6001. Australia's GDP data, expected to show a year-on-year growth rate of around 1.5%, is also set to be released.