The dollar index (DXY00) Friday rose by +0.51% and posted a 7-week high. The dollar has rallied every day this week as stronger-than-expected US economic news reduced the chances for a 50 bp Fed rate cut at next month’s FOMC meeting. Friday’s US Sep payroll report added to recent hawkish news as nonfarm payrolls and average hourly earnings rose more than expected, hawkish factors for Fed policy. According to the swaps market, the chances of a 50 bp rate cut by the Fed at the November 6-7 FOMC meeting fell to 0% Friday from 35% Thursday. The dollar also has support on increased safe-haven demand from the escalation of hostilities in the Middle East.
US Sep nonfarm payrolls rose +254,000, showing a stronger labor market than expectations of +150,000 and the largest increase in 6 months. The Sep unemployment rate unexpectedly fell -0.1 to 4.1%, showing a stronger labor market than expectations of no change at 4.2%.
