US Dollar Supported By Unemployment Rate Data Release & US Non-Farm Payrolls

Summary:

• The US unemployment rate decreased to 3.5%.
• The nation added 263,000 payrolls in September as opposed to the 250,000 expected.

US Unemployment rate exceeded market expectations

After the release of U.S. labor market data that revealed a strong economy and could encourage the Federal Reserve to continue its strategy of aggressive interest rate hikes, the Dollar rose substantially against the Euro, the British Pound, and the majority of other currencies.

The U.S. dollar, as measured by the DXY index, surged higher following the announcement of the September jobs report, helped by a significant increase in U.S. Treasury yields. The S&P 500 and Nasdaq 100 futures both fell more than 1.5% at the time of writing, entering negative territory.

Strong labor market data will probably keep the Fed on a hawkish course, driving policymakers to announce additional interest rate increases and preventing them from hastily shifting to a dovish stance. The U.S. dollar should benefit from this situation, but stocks may face significant challenges.

In spite of stubbornly high inflation, slowing growth, and higher borrowing costs, U.S. firms kept on hiring at a strong rate at the end of the third quarter, showing that the Federal Reserve's front-loaded hiking cycle has not yet resulted in significantly less demand for workers.

The U.S. Department of Labor reports that after an unrevised gain of 315,000 in August, the nation added 263,000 payrolls in September as opposed to the 250,000 expected. The jobless rate, meanwhile, decreased to 3.5%, matching one of its lowest points in decades.

The data released today demonstrate that despite two consecutive quarters of negative GDP readings and one of the most ferociously tightening cycles of monetary policy since the 1980s, the labor market is still strong and exceptionally tight. The analysis refutes assertions of widespread hiring freezes and significant layoffs across the nation and undermines the recession narrative.

In the wake of the release of the metrics, the EUR/USD currency pair weakened, the USD/JPY pair strengthened, the S&P 500 has fallen by around 2.6% and Bitcoin has fallen by more than 3.3% during the trading day. As the US continues to strengthen and concerns around a possible recession continue, the markets continue to be sensitive to this data.

Sources: dailyfx.com, poundsterlinglive.com