Dollar Strengthens, Rate Hike Odds Rise After Strong US Jobs Data

The US dollar strengthened following the release of August's payrolls report, which showed an increase in nonfarm payrolls by 162,000, beating forecasts. The Dollar Index rose about 0.17% to around 99.17.

Gold fell after the report, with one source citing a decline of about 0.80%, while another placed spot gold near $4,400 after it had reached $4,511 on Thursday. Bitcoin also retreated, slipping back below $80,000 and trading around $79,450 after an earlier rejection near $81,500.

The stronger-than-expected jobs report increased expectations of a September Fed rate hike, with market-implied odds rising to 60% to 63%, up from roughly 49% to 54%. Cleveland Fed President Beth Hammack said current monetary policy is not restrictive enough and that inflation remains too high. Trump welcomed the creation of 162,000 US jobs in August but renewed calls for sharply lower interest rates.

The upcoming ECB policy meeting on September 10 is expected to result in a 25 basis-point increase in the deposit rate to 2.50%, while next week's U.S. inflation data will be crucial ahead of the September 15-16 FOMC meeting.