Dollar a touch softer this morning
The dollar advanced further on Friday on the back of stronger than expected US jobs data, extending the gains it made during Thursday’s sharp fall in equity markets. The euro and sterling finished the day close to fresh lows for the week against the US currency, though both are a touch firmer at the start of this week trading at around $1.1190 and $1.34 respectively. EURGBP has been confined to a relatively tight trading range in recent sessions and opens this morning hovering just below £0.8350. While it is relatively quiet on the economic data front this week, the key release will be tomorrow’s CPI inflation report for October in the US.
US government bond yields backed up on Friday, reversing some of Thursday’s fairly sizeable fall, with 2-and 10-year yields rising by 6bps and 4bps respectively. Equivalent German and UK yields both edged higher, increasing by a couple of basis points on the day. US equity markets steadied following Thursday’s slump, with the Nasdaq gaining around 1% and the S&P 500 adding a bit less than 0.5%. European stocks shed around 1%, though they have opened in positive territory this morning.
The US economy added 165k jobs growth in October according to Friday’s non-farm payrolls report, much stronger than the consensus forecast for a gain of 70k, while the September outturn was revised up to +60k from +29k previously. Jobs growth has stepped up in 2026, averaging around 86k a month year to date versus just under 10k a month in January-0ctober 2025. The unemployment rate nudged down last month, to 4.1% (from 4.2% in September), matching its July-August low, while average hourly earnings rose by 0.4% on the month and by 3.1% on the year, the latter down a touch from 3.2% in September.
Fed member Daly says “my expectation is we’re going to have to tighten (monetary) policy further,” but “exactly when and how much is still to be decided because we just have to
take all the variables that are coming in.” She notes that inflation “has been high for too long…and we’re starting to feel the burden of that spread everywhere,” adding that getting inflation back to target “has to be our number one priority, and the fact that we have a solid labor market gives us the latitude really to just get that job done.”
Looking to the week ahead, the key economic data release will be October’s CPI inflation report in the US tomorrow (Tuesday). Other data of note scheduled included UK GDP for Q3 on Thursday – the consensus expects another quarter of very strong growth of 0.7% (q-o-q) – and producer prices (PPI) for October in the US on Friday. There are plenty of ECB/Fed/BoE members due to speak over the course of the week.