(Bloomberg) -- The dollar index is headed for its best week since Sept. 2022 as US hiring topped all estimates for September, prompting traders to slash bets for another big interest-rate reduction by the Federal Reserve next month. The yen dropped more than 1% against the greenback.
- The Bloomberg Dollar Spot Index jumped 0.4% as traders now are pricing in a 25bps cut at the upcoming meeting in November
- “This seals the deal on a 25bps cut next meeting,” said Brad Bechtel, global head of FX at Jefferies. “We had looked for a move back to 1.08-1.09 in EUR/USD and that should also be easy money on the back of this report.”
- Jefferies had forecast 220,000 for nonfarm payrolls, the highest among estimates, but the actual reading topped even that
- Nonfarm payrolls increased 254,000 in September, the most in six months
- “That dollar positivity that didn’t materialize at the end of Q3 could easily materialize through this month, especially as Middle East tensions continue to flare and the US election looms large,” said Helen Given, a foreign-exchange trader at Monex Inc.
- “We could see, and we’ve updated our forecasts to reflect this, a 1-2% comeback for BBDXY from last week’s lows through October and into the next Fed meeting,” she said
- EUR/USD dropped 0.6% to 1.0962
- NZD/USD fell 1%, second-worst performer in the Group of 10 after the yen
- USD/JPY advanced 1.1% to 148.51, highest level since Aug. 16
- USD/JPY has the best three day run since March 2020
- GBP/USD fell 0.3% at 1.3083
- USD/CAD rose 0.2% to 1.3584; the Canadian loonie the best performer in the group
- Some information comes from an FX trader familiar with the transactions who asked not to be identified because the person isn’t authorized to speak publicly
Reporting by Anya Andrianova and Vassilis Karamanis
