Dollar Rises After Strong U.S. Jobs Report

The Labor Department said nonfarm payrolls rose by 165,000 last month, far above the 65,000 economists polled by Reuters had expected, after September’s reading was revised up to 60,000. The unemployment rate fell to 4.1%, reinforcing the view that the economy is still generating enough jobs to keep policymakers wary of inflation risks.

The dollar index rose 0.77% to 102.26, putting it on track for its biggest daily gain since Sept. 16, while the euro fell 0.67% to $1.11437, headed for its steepest drop since Oct. 1. CME FedWatch showed the probability of at least a 25-basis-point rate increase at the December Fed meeting rising back to about 80%, underscoring how quickly bond and currency markets are repricing the policy path.

That move has immediate implications for Treasury markets, multinational earnings and emerging-market funding costs, since a firmer dollar tightens global financial conditions and can sap returns for foreign buyers of U.S. assets. The reaction also fits with recent strength in dollar-tracking funds, with UUP trading above both its 50-day and 200-day moving averages and its RSI readings still in bullish territory after a recent run-up.

With the labor market still resilient, traders will now focus on the next inflation prints and Fed commentary for confirmation that the central bank can keep rates restrictive into year-end. If inflation data stays sticky, the dollar’s rally could extend; if price pressures ease, today’s move may prove a short, sharp repricing rather than a new trend.