What happened
October's US nonfarm payrolls showed employers added 165,000 jobs, more than double analysts' forecasts, as the unemployment rate fell to 4.1% from 4.2%. The Dollar Index surged about 0.7%, its biggest one-day gain in nearly six months, pushing EUR/USD to $1.1132, near its lowest since May 2025, and lifting USD/JPY 0.6% on Friday.
On Monday the dollar is retracing as investors lock in profits and risk appetite recovers. The Dollar Index has dipped back toward 102.00. EUR/USD has edged above $1.1150, sterling approached $1.3400, and USD/JPY eased toward 158.00. An AI-stock selloff that added to safe-haven demand on Friday has also calmed at the start of the week.
Why it moves currencies
When a jobs report beats forecasts by this margin, it tells markets the US economy is resilient enough to absorb higher interest rates. The Federal Reserve raises rates to control inflation, and a strong labour market reduces urgency to cut. That shifts the rate differential in the dollar's favour: higher US rates make dollar-denominated assets more attractive to global investors, pulling capital in and lifting the currency.
Today's retreat is classic profit-taking. After a large directional move, traders who bought dollars on Friday sell some of that position to lock in gains. This does not change the underlying thesis. Market pricing for a Fed rate hike at December's meeting moved higher after Friday's data, and that repricing will continue to anchor the dollar at a firmer level than before the payrolls report.
Where it shows up
What to watch
Three Federal Reserve speakers are scheduled today: Bowman, Goolsbee, and Barkin. Hawkish remarks could reinforce December hike bets and reverse the dollar's morning pullback. BoE Governor Bailey also speaks at around 17:25 UTC, and sterling is sensitive to any caution that follows last week's rate hike. Wednesday's US CPI report is the week's most consequential event for the dollar.
Filed in the Library as a Wire lesson →Four more things that moved
Kiwi rises as New Zealand election yields narrow win
New Zealand's weekend election produced a close result, with the incumbent coalition apparently securing a narrow majority. NZD/USD rose roughly 1% as traders welcomed reduced political uncertainty, though special votes will not be counted until November 27.
BoE's Pill calls hike pre-emptive, capping sterling
The Bank of England voted unanimously to raise rates to 4% on November 5. Chief Economist Huw Pill then described the move as pre-emptive and cautioned against expecting a repeat of the aggressive 2022 tightening cycle, capping sterling's post-hike gains into the weekend.
AI stock rout drove risk-off wave, AUD now recovering
A broad selloff in AI and technology stocks late last week amplified the dollar's post-NFP gains, pushing AUD/USD more than 1% lower on Friday to near a seven-month low. The Aussie has since rebounded as market sentiment stabilised on Monday.
Trump plays down Iran strikes, Brent crude slides
President Trump said renewed strikes on Iran were unlikely, easing geopolitical risk premium that had supported oil prices. Brent crude fell 1.3% on Monday, removing a tailwind for commodity-linked currencies while also calming broader safe-haven demand for the dollar.
What's scheduled, in UTC
- 01US dollar holds onto payrolls gains, NZ dollar rises after election · Reutersreuters.com
- 02US dollar slips amid post-payrolls profit-taking · TorFX Newsnews.torfx.com
- 03Dollar jumps after strong US payrolls report · Reutersreuters.com
- 04New Zealand Dollar Advances as Ruling Party Gets Election Edge · Bloombergbloomberg.com
- 05Pound rises as BoE hikes rates and signals more to come · TorFX Newsnews.torfx.com
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