Dollar Weakens After US Reports September Nonfarm Payrolls Rose Only 29,000

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Summary · why it matters

The dollar weakened against major currencies, in line with the decline in US government bond yields, after the US reported sluggish employment figures, which will support the Federal Reserve in holding interest rates steady at this month's monetary policy meeting. At 9:38 pm Thailand time, the dollar index, which measures the dollar's movement against six major currencies in a basket, fell 0.38% to 101.71, while the dollar weakened 0.34% to 1.128 against the euro and dropped 0.36% to 157.51 yen. The US Labor Department reported that nonfarm payrolls rose by only 29,000 in September, below analysts' forecast of 89,000. The unemployment rate rose to 4.2%, while analysts had expected it to hold steady at 4.1%. The Labor Department also revised August payrolls to an increase of 133,000 from a previously reported gain of 162,000. The private sector added 46,000 jobs in September, while government employment fell by 17,000. Meanwhile, average hourly earnings rose 3.0% in September from a year earlier, below analysts' forecast of 3.2%, and edged up 0.1% month on month, below the expected 0.3%. The yield on 30-year US government bonds fell to 5.570% after earlier surging to its highest level since 2002, while the 10-year yield fell to 5.180% after hitting its highest since 2002 this week, and the 2-year yield fell to 4.730%. Investors increased their bets that the Fed will hold rates steady at its October meeting following the sluggish employment data, having previously expected a rate hike this month. The latest FedWatch Tool from CME Group indicates that investors assign an 83.9% probability to the Fed holding rates at 3.75-4.00% at the October meeting, up from just 35.8% a week earlier. In addition, investors assign a 16.1% probability to the Fed raising rates by 0.25% to 4.00-4.25% at the October meeting, down from as much as 64.2% a week earlier.

Impact on assets 4

Others▼ · 4 stocks
％Effective Federal Funds Rate
EFFR
▼ NegativeMonetaryrelevance

Sluggish September payrolls (+29k) and rising unemployment boost odds the Fed holds rates steady, implying no hike and downward pressure on the effective fed funds rate.

％US Government Bond 2Y
US-2Y
▼ NegativeMonetaryrelevance

Dovish repricing after the weak payrolls report drove the 2-year Treasury yield down to 4.730%.

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