By Saqib Iqbal Ahmed and Laura Matthews
NEW YORK (Reuters) – The dollar rose against the euro and recovered against most major currencies on Friday as traders digested data showing U.S. job growth slowed sharply in October due to disruptions from hurricanes and strike action by factory workers in aerospace.
Nonfarm payrolls rose by 12,000 jobs, after a downwardly revised 223,000 in September, according to the Department of Labor’s Bureau of Labor Statistics. Economists polled by Reuters had forecast payrolls would rise by 113,000 in October.
However, the US unemployment rate remained stable at 4.1%, providing assurance that the labor market remains on solid footing.
Hurricane Helene devastated the Southeast in late September and a week later Hurricane Milton ravaged Florida. A total of 41,400 new workers were on strike, including machinists at Boeing (NYSE:) and Textron (NYSE:), an aircraft company, when employers were surveyed for the October employment report.
“Since this morning’s data has fully recovered, the focus has shifted to the uncertainty surrounding the upcoming US presidential election,” said Uto Shinohara, senior investment strategist at Mesirow in Chicago.
“Current polls continue to paint the race as a toss-up, with a potential risk of delayed results, making next week a busy one as the (Federal Reserve) also meets just days later.”
The dovish jobs report, he added, maintains the Fed’s trajectory for a 25 basis point rate cut this month.
The euro fell 0.40% against the dollar to $1.084.
The dollar index, which tracks the greenback against six major currencies, rose 0.36% to 104.24.
“It’s important when we look at the downward revisions, especially that most of that hugely negative figure came in August rather than September, so the year-end picture still doesn’t look too dire,” says Helen Given, Assistant Director. of trading on Monex USA.
Futures traders who settle for the Fed’s policy rate estimate a 99% chance of a quarter-point rate cut on November 7, to 4.5%-4.75%.
That the Fed bets haven’t changed much also suggests that “traders see this more as a fluke” and that the healthy labor market is keeping the dollar afloat, Given said.
“There is also a large portion of the market that will likely remain quite cautious until all of the risk events next week are off the table, keeping the USD in range,” she added.
The Labor Department’s closely watched employment report was the last major economic figure before Americans went to the polls on Nov. 5 and faced a choice between Democratic Vice President Kamala Harris or Republican former President Donald Trump as the next president. country.
Opinion polls show that the race is very close. The Fed announces its policy decision two days after the election.
The dollar was on track to break a three-session losing streak against the yen, rising 0.60% to 152.94 ahead of a three-day weekend in Japan.
Less forgiving comments from Bank of Japan Governor Kazuo Ueda after the central bank’s decision to hold on Thursday had sent the yen higher earlier this week.
“We think the chances of a rate hike in December have increased somewhat following the Ueda government’s press conference,” Morgan Stanley MUFG economists Takeshi Yamaguchi and Masayuki Inui wrote in a report on Thursday. Their base case remains that the BOJ will raise rates again to 0.5% in January.
Sterling rose 0.26% to $1.29632 on Friday and was on the verge of breaking a five-week streak of weekly losses against the dollar. The UK government’s short-term borrowing costs jumped to their biggest weekly jump in more than a year on Friday as Labour’s tax and spending budget lifted inflation expectations.
In cryptocurrencies, bitcoin, the world’s largest cryptocurrency by market capitalization, rose 0.57% on the day to $69,531.
