US and Canadian job markets are strong

North American stocks rose on Friday after four days of slide as both countries" jobs reports showed strong labor market reports which limits fear of recession and supports central banks" determination to continue with their tightening programs and interest rate increases. S&P 500 and Nasdaq lost 3.35% and 5.65% and Canada’s S&P/TSX declined 0.11% this week.

 

Earlier this week, US central banks increased the interest rate by another 0.75% to 3.75%. The implied curve shows expectation is for another 0.5% by year-end and the terminal rate reaching around 5.1 around April, meaning two more increases in 2023. The October US inflation report is due next week which shows whether the efforts have effectively helped tame inflation.

 

The US dollar meanwhile which was expected to continue crushing other major currencies after the US Fed interest rate decision gave up gains today and declined the most since 2020. The DXY index which is a weighted basket of world major currencies against the US dollar is standing declined to 110 after touching 114 for a few days. Other central banks including UK and Eurozone are catching up with the US and Canada to stop the continued depreciation of their currencies.