US Dollar Turns Negative

North Korea’s preparations to test a long-range missile that can potentially reach the US west coast has stirred up risk sentiment once again.  Confirmation of this development comes from a Russian lawmaker, who had returned from a visit to Pyongyang. After initially surging higher on a hurricane-ridden September jobs report that showed the first contraction in employment creation in seven years, the US dollar turned negative against most major currencies on Friday.

Nonfarm payrolls fell by -33,000, undercutting market estimates of a 90,000 gain despite the unemployment rate falling to 4.20%. USDJPY spiked to a 12-week high on Friday before sliding lower, with the pair was last seen around 112.550. On the downside, the area around 112.200 marks a key support zone, with any breach below potentially causing a deeper selloff. Trading is in the Yen is thinner than normal owing to a public holiday in Japan.

Figures published by the Office for National Statistics on Friday showed that British labour productivity fell for the second straight quarter, underscoring one of the key challenges facing the economy as Brexit approaches. Labour productivity, as represented by output per hour, dropped -0.10% in the three months to June following a -0.50% contraction in the first quarter of 2017.

Manufacturing productivity slumped by -1.30% while services productivity edged 0.20% higher. British productivity continues to lag major trading partners like the United States, Germany and France. Once the exit from the European Union is complete, the prospect of fewer skilled workers coming to the UK will make catching up even harder, which in turn, could further dent business investment. GBPUSD slid to a one-month low on Friday before mounting a rebound in Monday morning trade and edging back above 1.3100.