# Dollar tumbles as U.S. nonfarm payrolls show mixed picture
Author:  Pal Sinha, Barnali 
Author URL: https://financedigest.com/author/pal-sinha-barnali
Published: 2022-11-04
Category: TRADING
Category URL: https://financedigest.com/category/trading
Meta Title: USD Slumps as US Nonfarm Payrolls Report Highlights Mixed Data
Meta Description: The dollar dropped after October's nonfarm payrolls report revealed jobs growth but higher unemployment and slower wage inflation, impacting Fed rate hike
URL: https://financedigest.com/dollar-tumbles-as-u-s-nonfarm-payrolls-show-mixed-picturehtml

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By Gertrude Chavez-Dreyfuss

NEW YORK (Reuters) – The dollar slumped on Friday after the U.S. nonfarm payrolls report for October showed the world’s largest economy created more new jobs than expected, but also flashed signs of slowdown with the [higher unemployment rate](https://www.financedigest.com/dollar-jumps-as-powell-flags-higher-terminal-rate.html "Dollar jumps as Powell flags higher terminal rate") and lower wage inflation.

The greenback initially rose immediately after the data, but fell as market participants digested the jobs report, noting that the [data was not all positive and supports the view that the Federal Reserve could slow the pace of future rate](https://www.financedigest.com/dollar-advances-as-strong-u-s-data-backs-higher-rates-backdrop.html "Dollar advances as strong U.S. data backs higher rates backdrop") hikes.

U.S. nonfarm payrolls increased 261,000 [last month](https://www.financedigest.com/monkeypox-emergency-could-last-months-with-window-closing-to-stop-spread-experts-say.html "Monkeypox emergency could last months, with window closing to stop spread, experts say"), data showed on Friday. [Data for September was revised higher to show 315,000 jobs](https://www.financedigest.com/stocks-mixed-dollar-gains-after-robust-inflation-jobs-data.html "Stocks mixed, dollar gains after robust inflation, jobs data") added instead of 263,000 as previously reported. Economists [polled by Reuters](https://www.financedigest.com/economic-headwinds-set-to-push-oil-below-100-in-2023-reuters-poll.html "Economic headwinds set to push oil below 0 in 2023: Reuters Poll") had forecast 200,000 jobs, with estimates ranging from 120,000 to 300,000.

However, the [unemployment rate](https://www.financedigest.com/u-s-job-growth-powers-ahead-unemployment-rate-at-3-4.html "U.S. job growth powers ahead; unemployment rate at 3.4%") rose to 3.7% from September’s 3.5%. [Average hourly earnings increased](https://www.financedigest.com/taylor-wimpey-espana-remain-cautiously-optimistic-as-average-selling-price-increases-by-20-4.html "Taylor Wimpey España ‘remain cautiously optimistic’ as average selling price increases by 20.4%") 0.4% after rising 0.3% in September, but the rise in wages slowed to 4.7% year-on-year in October after advancing 5.0% in September.

The [fed funds futures on Friday priced in a 51.5% chance of a 75-basis-point interest rate hike](https://www.financedigest.com/shares-fall-with-oil-prices-amid-concerns-about-u-s-fed-rate-hikes.html "Shares fall with oil prices amid concerns about U.S. Fed rate hikes") next month, and a 48.5% probability of a 50-basis-point increase. The odds of a 75-basis-point [rise went as high as 64% immediately after the data](https://www.financedigest.com/dollar-slips-after-upbeat-china-data-euro-pound-rise.html "Dollar slips after upbeat China data; euro, pound rise").

The [Fed’s terminal rate](https://www.financedigest.com/wage-data-dents-dollar-recovery-before-fed-rate-decision.html "Wage data dents dollar recovery before Fed rate decision"), or the level at which rates would peak, slipped to 5.16% after the payrolls data, from about 5.2% just before.

Although today’s report is a pretty mixed bag overall, we do not see how the Fed can look at this [data and think that they are making meaningful progress towards getting inflation](https://www.financedigest.com/dollar-dips-ahead-of-inflation-data-later-this-week.html "Dollar dips ahead of inflation data later this week") under control,” said Thomas Simons, money market economist, at Jefferies in New York.

Payroll growth is [slowing and wage growth is decelerating, but neither one is slowing fast](https://www.financedigest.com/at-the-home-of-zara-fast-and-slow-fashion-collide.html "At the home of Zara, fast and slow fashion collide") enough. Today’s data leaves the [possibility of another 75-bp rate hike](https://www.financedigest.com/sp-warns-of-possible-economic-blow-hit-to-japan-inc-from-boj-rate-hike.html "S&P warns of possible economic blow, hit to Japan Inc from BOJ rate hike") firmly on the table for the December FOMC meeting, though obviously we have several other important data releases between now and then.

Despite the strong [jobs data](https://www.financedigest.com/stocks-sag-as-hawkish-fed-cools-china-rally-awaits-us-jobs-data.html "Stocks sag as hawkish Fed cools China rally; awaits US jobs data"), Fed officials on Friday said a smaller rate increase is still on the table for the December policy meeting.

The jobs numbers show “the labor [market remains tight,” Richmond Fed](https://www.financedigest.com/markets-start-signalling-fed-may-be-going-too-far-amundi.html "Markets start signalling Fed may be going too far – Amundi") President Thomas Barkin told broadcaster CNBC soon after the release of the data, adding that he nevertheless is ready to act more “deliberatively” on the pace of future rate increases even as he keeps an open mind on the outcome of the next policy meeting in December.

When you get your foot on the brake, you [think about steering in a very different way](https://www.financedigest.com/three-ways-that-2022-is-going-to-change-how-you-think-about-money.html "Three ways that 2022 is going to change how you think about money") … sometimes you act a little bit more deliberatively, and I’m ready to do that,” Barkin said. And I think the implication of that is probably a slower [rate of pace of rate increases, a longer pace of rate increases and potentially a higher](https://www.financedigest.com/powells-warning-on-higher-u-s-rates-pushes-dollar-to-3-mth-high.html "Powell’s warning on higher U.S. rates pushes dollar to 3-mth high") end point.

The [dollar fell 0.8% against the yen](https://www.financedigest.com/yen-sinks-as-rates-outlook-diverges-nz-dollar-tumbles.html "Yen sinks as rates outlook diverges; NZ dollar tumbles") to 147.06 yen, while the euro rose 1.7% to $0.9920.

The dollar index, a measure of the greenback’s value against six [major currencies](https://www.financedigest.com/u-s-dollar-advances-vs-major-currencies-as-risk-appetite-fades.html "U.S. dollar advances vs major currencies as risk appetite fades"), rose 1.6% to 111.17. On the week, the index was down 0.5%.

The U.S. currency firmed on Wednesday and Thursday after Fed Chair Jerome Powell on Wednesday said the central [bank could continue to increase rates if inflation](https://www.financedigest.com/be-really-really-careful-on-inflation-bank-of-englands-haskel.html "Be ‘really, really careful’ on inflation – Bank of England’s Haskel") doesn’t slow, causing markets to price in a higher peak for U.S. rates.

========================================================

[Currency bid](https://www.financedigest.com/evergrande-jitters-pull-risk-currencies-lower-dollar-gains-on-safety-bid.html "Evergrande jitters pull risk currencies lower, dollar gains on safety bid") prices at 1:42PM (1742 GMT)

Description RIC Last U.S. Close Pct Change YTD Pct High Bid Low Bid

Previous Change

Session

[Dollar index](https://www.financedigest.com/dollar-index-jumps-after-u-s-retail-sales-show-surprise-rebound.html "Dollar index jumps after U.S. retail sales show surprise rebound") 111.2000 112.9700 -1.55% 16.241% +112.9900 +110.9500

Euro/Dollar $0.9915 $0.9750 +1.74% -12.75% +$0.9941 +$0.9745

Dollar/Yen 147.0150 148.2600 -0.84% +27.70% +148.3950 +146.5700

Euro/Yen 145.78 144.55 +0.85% +11.86% +145.9600 +144.2400

Dollar/Swiss 0.9969 1.0138 -1.68% +9.27% +1.0143 +0.9942

Sterling/Dollar $1.1312 $1.1159 +1.39% -16.34% +$1.1336 +$1.1150

Dollar/Canadian 1.3511 1.3750 -1.74% +6.85% +1.3750 +1.3468

Aussie/Dollar $0.6449 $0.6288 +2.59% -11.25% +$0.6477 +$0.6285

Euro/Swiss 0.9883 0.9879 +0.04% -4.69% +0.9894 +0.9848

Euro/Sterling 0.8765 0.8736 +0.33% +4.32% +0.8785 +0.8700

NZ $0.5903 $0.5776 +2.28% -13.70% +$0.5918 +$0.5756

Dollar/Dollar

Dollar/Norway 10.2695 10.5725 -2.64% +16.84% +10.5775 +10.2300

Euro/Norway 10.1854 10.3123 -1.23% +1.72% +10.3264 +10.1570

Dollar/Sweden 10.9442 11.1648 -0.62% +21.36% +11.2050 +10.8995

Euro/Sweden 10.8521 10.9201 -0.62% +6.04% +10.9237 +10.8302

(Reporting by Gertrude Chavez-Dreyfuss; Additional reporting by Joice Alves and Alun John in London; Editing by Kirsten Donovan, Jonathan Oatis and Chizu Nomiyama)


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