Authors: Saqib Iqbal Ahmed and Laura Matthews
NEW YORK (Reuters) – The dollar rose against the euro and rebounded against most major currencies on Friday after investors digested data showing U.S. job growth slowed sharply in October amid disruptions from hurricanes and a strike. aircraft factory workers.
The Department of Labor’s Bureau of Labor Statistics reported that nonfarm payrolls rose by 12,000 after a downwardly revised figure of 223,000 in September. Economists polled by Reuters forecast that employment will escalate to 113,000 in October.
However, the US unemployment rate remained stable at 4.1%, ensuring that the labor market is on solid footing.
Hurricane Helene devastated the Southeast in overdue September, and Hurricane Milton hit Florida a week later. When employers were surveyed for the October jobs report, a total of 41,400 novel workers were on strike, including machinists at Boeing (NYSE:) and Textron (NYSE:) , the aerospace company.
“Business has fully returned to normal since the data was released this morning, focusing attention on the uncertainty surrounding the upcoming (US presidential) election,” said Uto Shinohara, senior investment strategy specialist at Mesirow in Chicago.
“Current polls continue to paint the race as a toss-up, with the potential for a delay in results, making next week a busy week as the (Federal Reserve) also meets just a few days later.”
He added that the low jobs report maintains the Fed’s trajectory of cutting interest rates by 25 basis points this month.
The euro fell 0.40% against the dollar to $1.084.
The dollar index, which tracks the price of the dollar against six major currencies, rose 0.36% to 104.24.
“This is important as we look at downward revisions, especially as most of this extremely negative value occurred in August rather than September, so the year-end picture still doesn’t seem too bleak,” said Helen Give, deputy director of trading at Monex USA.
Traders in futures contracts, which settle at the Fed’s interest rate, were pricing in about a 99% chance of a quarter-percentage-point rate cut on Nov. 7 to 4.5% to 4.75%.
That the Fed’s bets haven’t changed much suggests that “traders are treating it more as a coincidence” and that a robust labor market is keeping the dollar afloat, Taking said.
“There is also a large portion of the market that will likely remain quite cautious until all of next week’s risky events are off the table, thus maintaining the USD range,” she added.
The Labor Department’s closely watched jobs report was the last major economic data before Americans go to the polls on Nov. 5 and face the choice of Democratic Vice President Kamala Harris or former Republican President Donald Trump as the nation’s next president.
Polls show the race is very close. The Fed announces its policy decision two days after the election.
The dollar was on track to end a three-session losing streak against the yen, rising 0.60% to 152.94 ahead of the three-day weekend in Japan.
Less dovish comments from the Governor of the Bank of Japan, Kazuo Ueda, after the central bank’s decision on Thursday to maintain the yen exchange rate contributed to the escalate in the yen rate at the beginning of the week.
“We believe the chances of a December interest rate increase have increased slightly following Governor Ueda’s press conference,” Morgan Stanley MUFG economists Takeshi Yamaguchi and Masayuki Inui wrote in a report on Thursday. The basic scenario remains that the BOJ will escalate interest rates again to 0.5% in January.
Sterling rose 0.26% to $1.29632 on Friday and is set to snap a five-week streak of weekly losses against the dollar. The British government’s short-term borrowing costs hit their biggest weekly rise in more than a year on Friday as Labour’s tax-and-spend budget boosted inflation expectations.
On the cryptocurrency side, Bitcoin, the world’s largest cryptocurrency by market capitalization, rose 0.57% on the day to $69,531.
