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What’s happening: The US dollar recorded gains on Friday, following the release of the nonfarm payrolls (NFP) report.
What happened: The greenback surged to a seven-week high on Friday, as upbeat jobs data resulted in speculations of the Federal Reserve slowing its interest rate cuts.
The US dollar rose versus the Japanese yen as investors assessed the Bank of Japan’s dovish stance.
Why it matters: Data released on Friday showed US nonfarm payrolls rose by 254,000 in September. The job adds were higher than the 159,000 recorded in August and topped market estimates of 140,000. The recent gain in jobs was the strongest in six months and higher than the monthly average of 203,000 job adds over the past 12 months.
The unemployment rate fell to 4.1% in September, from 4.2% in August, hitting the lowest level in three months. Average hourly earnings for all employees on private nonfarm payrolls rose by 0.4% to $35.36 in September, surpassing market expectations of a 0.3% gain.
More hawkish comments from Fed chief Jerome Powell last week also eased speculations of large interest rates cuts by the US central bank. Markets widely expect the Fed to cut rates by 25 basis points (bps) at its upcoming meeting on November 6-7, versus earlier speculations of a 50bps cut.
The US dollar also received support from increased demand for safe-haven assets amid rising geopolitical concerns.
The US dollar index, which measures the greenback’s performance versus a basket of major peers, gained around 0.5% to 102.49, after hitting the strongest level since August 16 earlier in the session.
The EUR/USD forex pair rose slightly to 1.0983 on Friday, while the USD/JPY pair edged higher to 148.73, after climbing to its highest level since August 16. The GBP/USD forex pair gained 0.1% to 1.3126.
What to watch: Investors await the release of economic data on consumer credit from the US today. Total consumer credit in the US, which rose by $25.45 billion in July, is expected to grow by $13.5 billion in August.
Comments from Fed officials regarding interest rates will also be in focus.
Context: Equity markets in Europe settled mostly higher on Friday, as investors monitored the US jobs report.
Details: A stronger-than-expected jobs report from the US eased concerns around a slowdown in the world’s largest economy.
Data released on Friday also showed the Eurozone’s HCOB construction PMI rose to 42.1 in September, from a six-month low of 41.4 in August. Although this still signalled a contraction in overall construction activity in the region, markets responded to the improvement.
The STOXX Europe 600 Index gained 0.44% to close at 518.56 on Friday, with most sectors closing in the positive zone. However, the index closed the week in the red amid heightened geopolitical tensions.
Bank stocks were among the top performers on Friday, gaining around 1.7%, while oil and gas shares rose about 1.6%, extending gains on supply concerns. Stocks of automakers jumped around 1.5%, after the European Union approved tariffs on EVs made by China.
Germany’s DAX 40 gained 0.55% to close at 19,120.93, while France’s CAC 40 added 0.85% to settle at 7,541.36. London’s FTSE 100 bucked the trend and fell 0.02% to close at 8,280.63 on Friday.
What to watch: Investors await the release of retail sales data from the Eurozone today. Retail sales in the Eurozone, which grew 0.1% in July, are expected to increase by 0.2% in August.
Other Markets: US trading indices closed higher on Friday, with the Dow Jones index, S&P 500 and Nasdaq 100 up by 0.81%, 0.90% and 1.22%, respectively.
During his visit to Ukraine, Dutch Minister of Defence Ruben Brekelmans announced plans to invest €400 million for drone development. Despite this, the RUB/USD pair rose in forex trading this morning.
Australia’s Melbourne Institute’s Monthly Inflation Gauge rose by 0.1% in September, lending support to the AUD/USD forex pair.
Japan’s reserve assets rose to $1.25 trillion in September, from $1.24 trillion in the previous month. The country’s foreign reserve assets surging to the strongest level since April sent the JPY/USD pair higher in forex trading this morning.
Qatar’s trade surplus narrowed to QAR 19.8 billion in August, from QAR 21.4 billion in the year-ago month. A steep decline in exports exerted pressure on the QAR/USD forex pair.
Vietnam’s retail sales grew by 7.6% year-over-year in September. This marked a slowdown from the 7.9% surge in the previous month, which sent the VND/USD pair lower in forex trading this morning.
Germany’s factory orders, South Africa’s foreign exchange reserves, UK’s Halifax house price index, France’s foreign exchange reserves, Singapore’s foreign exchange reserves, Russia’s foreign exchange reserves, Turkey’s treasury cash balance, Japan’s foreign exchange reserves, Russia’s total vehicle sales, Central Bank of Brazil’s focus market readout, as well as US Manheim used vehicle value index.
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