US Jobs Surprise Sends Dollar Higher (9-13 November)

The dollar index climbed 0.6% to 102.2 after October payrolls surged by 165,000, far above the 65,000 forecast, while unemployment fell to 4.1%.

The figures strengthened December Fed hike expectations, pushing the euro below $1.115 and sterling under $1.335. Meanwhile, Japan's strong wage growth supported the yen near 157.8 per dollar.

Gold approached $4,050 and silver slipped below $52 as dollar strength and higher rate expectations weighed on precious metals. Still, safe-haven demand following the midterm elections helped gold secure a weekly gain exceeding 4%, while silver advanced more than 6%.

Currencies

Dollar Index: The dollar index climbed 0.6% to 102.2 after US employers added 165,000 jobs in October, far exceeding the 65,000 forecast, while unemployment fell to 4.1%. Widespread hiring strengthened expectations of a December Fed rate hike, with demand for safer assets during the AI-driven equity selloff providing additional support.
Euro: The euro slipped below $1.115, approaching multi-month lows as upbeat US employment figures and demand for the dollar weighed on the currency. Meanwhile, Eurozone inflation reached a three-year high of 4% in October, driven by energy costs. ECB President Christine Lagarde indicated that incoming data would guide the decision on a possible December rate hike.
British Pound: Sterling retreated below $1.335 from nearly two-month highs as US labor market strength lifted the dollar. The Bank of England's first rate hike in over three years also drew attention, with Governor Andrew Bailey signaling further tightening unless the Iran war ends. Markets price in three additional hikes by November 2027, with inflation potentially reaching 4.9%.
Japanese Yen: The yen traded near 157.8 per dollar following two sessions of gains, supported by Japan's fastest nominal wage growth in nearly three decades. BOJ minutes pointed to a potentially quicker pace of tightening, strengthening expectations of a December hike. Demand for the yen also benefited from the technology selloff sparked by AI regulation concerns following the Democrats' midterm victory.

Commodities

Gold Heads for 4% Weekly Gain

Gold eased toward $4,050 an ounce as stronger US employment and wage figures, alongside higher oil prices, reinforced expectations of a December Fed hike. The resulting dollar rally pressured bullion, although demand for safer assets following the midterm elections kept gold on track for a weekly gain exceeding 4%.

Oil Prices Stabilize

Brent steadied near $98 a barrel, recovering some losses as diplomatic efforts with Iran faced persistent security threats. Tanker attacks in the Strait of Hormuz remained near record levels, while Tehran reportedly submitted a nuclear proposal through Qatar. Significant disagreements over sanctions and Iran's nuclear program remain unresolved, leaving Brent down more than 12.5% for the week.

Silver Defies Dollar Strength

Silver hovered below $52 an ounce as the dollar strengthened following October's stronger-than-forecast US jobs report. Upward employment revisions, faster wage growth and rising oil prices reinforced December Fed hike expectations. Despite these pressures, silver gained more than 6% over the week, supported by safe-haven demand after the midterm elections.

Fixed Income

US 10 Year Treasury Note Yield: The US 10-year Treasury yield briefly climbed 6 basis points to 4.9% before easing toward 4.86%. October's 165,000 payroll gain, lower unemployment and stronger wages strengthened expectations of a December Fed hike, while a stock market rebound reduced demand for government bonds. Investors also assessed Democratic proposals to limit tax cuts, reduce spending and tighten AI regulation.
UK 10 Year Bond Yield: UK 10-year gilt yields rose above 5.15%, rebounding from two-month lows as strong US employment data pushed Treasury yields higher. Safe-haven demand during the technology selloff tempered the increase. Meanwhile, the Bank of England's first hike in over three years left markets pricing three further increases by November 2027.
Japan 10 Year Government Bond Yield: Japan's 10-year government bond yield fell to a four-month low near 2.67% on Friday as the equity selloff drove demand for safer assets. AI regulation concerns and expectations of lower oil prices added downward pressure. Still, Japan's strongest wage growth in nearly 30 years and hawkish BOJ minutes supported expectations of a December rate hike.
Germany 10-Year Bond Yield: Germany's 10-year Bund yield dropped below 3.25%, its lowest since late August, as the technology selloff fueled demand for government bonds. Democratic control of the US House also reduced concerns over American borrowing. Meanwhile, Eurozone inflation reaching 4% and hawkish ECB remarks sustained expectations of further monetary tightening.

Economic Data

United States Nonfarm Payrolls

US employers added 165,000 jobs in October, surpassing the 65,000 forecast and the previous year's monthly average of 48,000. Professional and business services led hiring with 70,000 positions, followed by healthcare with 42,000, transportation with 25,000 and manufacturing with 19,000. August and September payrolls were also revised higher by a combined 84,000.

United States Unemployment Rate

US unemployment fell to 4.1% in October from 4.2%, slightly below forecasts, as employment increased by 463,000 and the number of unemployed declined to 7.07 million. Labor force participation rose to 61.9% from 61.8%, while the employment-to-population ratio reached 59.3%, its highest since February. In contrast, the broader U-6 underemployment rate increased to 7.9% from 7.6%.

United States Job Openings

US job openings rose unexpectedly by 333,000 to 7.52 million in September, reaching a four-month high and beating the 7.10 million forecast. Professional and business services, government and manufacturing accounted for much of the increase. Layoffs dropped to their lowest since March 2025, while the quits rate reached 2.1%, its highest in over a year, suggesting greater confidence among workers.

Euro Area Inflation Rate

Eurozone inflation accelerated to 4% in October from 3.8%, reaching its highest since September 2023 as energy inflation surged to 20.8% during the Middle East conflict. Services and unprocessed food prices also rose faster, while core inflation held at 2.5%. Inflation accelerated in France and Italy but eased slightly in Germany and Spain.

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