Strong U.S. Jobs Data Sparks Rate Hike Expectations

The U.S. dollar surged after the release of August's payrolls report, which showed a stronger-than-expected increase in jobs and wages. The Dollar Index rose about 0.17% to around 99.17, while EUR/USD traded near 1.1605 down roughly 0.18%. The strong data pushed up market-implied odds of a September Federal Reserve rate hike to around 60-63%, from 49-54% the day before.

Gold and Bitcoin retreated in response to the jobs report, with gold falling about 0.80% after losses exceeding 2% following the release. The precious metal traded near $4,400, down from Thursday's high of $4,511. Bitcoin also slipped back below $80,000, trading around $79,450 after earlier nearing $81,500.

The stronger-than-expected payrolls report increased expectations of a September Fed rate hike, with some officials and analysts still expecting no change in rates, but several saying the risk of a 25 basis-point move has materially increased. The decision will be influenced by next week's U.S. inflation data ahead of the September 15-16 FOMC meeting.