Dollar Holds Firm Despite Weak US Jobs Report
The US dollar has held steady ahead of the crucial employment report, defying market expectations that it would weaken. The yen and franc are exceptions, gaining 0.30-0.40%.
Recent comments from FOMC Vice Chair Williams and Federal Reserve Board Vice Chair Jefferson suggested a lack of urgency in raising interest rates, contradicting the market's earlier assumption of a 70% chance of a hike this month. The probability has since dropped to around 25%.
The US labor market report revealed mixed results: nonfarm payrolls rose by 29,000 in September, falling short of the expected 84,000, while the unemployment rate increased to 4.2%. Economists had forecasted a job growth of 90,000 and an unchanged unemployment rate.
The Fed-dated swaps market no longer prices in one full rate hike this year. The US labor market's resilience is being questioned by the slower job growth and higher-than-expected unemployment rate.