NFP Quick Analysis: Even more dollar gains? Trio of strong figures point to rate hikes

  • The US has gained 531,000 jobs in October, better than 425,000 expected. 
  • Revisions add some 235,000 positions to the previous two reports. 
  • Annual wage growth is just shy of 5% yearly, adding to inflationary pressures. 
  • The dollar is up and there could be more to come. 

Spectacular – that is a proper description of October's Nonfarm Payrolls report. The economy gained 531,000 jobs, which is a significant beat on expectations for 425,000 after two badly disappointing months.

The second positive surprise is these previous two months were not as horrible. American gained 312,000 positions in September, a considerable leap from 194,000 originally reported. August was also revised up, making the total upward move worth 235,000. That is phenomenal.

Last and not least, wage growth remains robust. Average Earnings rose by 0.4% in October, as expected – but up by 4.9% YoY. Overall, there are more workers and they have more money entering their pockets. Those funds are set to push prices higher and diminish the already fading "transitory" narrative about price rises. Wage hikes are those "secondary effects" that some dismissed and are now materializing.

Good news for workers is also good news for the dollar, as the potent mix of the US economy nearing full employment and more robust price pressures could bring a rate hike sooner.

This jobs report was supposed to be an afterthought in comparison to the Federal Reserve's historic tapering decision earlier in the week – but the Fed changed the script. Chair Jerome Powell signaled that raising rates depends on the US reaching full employment, making this report more critical to the market reaction. 

It will likely continue echoing in traders' minds – his words and the data. 

Bonus figure: the Participation Rate remained stuck at 61.6%, and that somewhat takes the sting out of the drop in the Unemployment Rate from 4.8% to 4.6%. However, it also shows there are probably fewer people on the sidelines – less slack. Early retirements, new businesses and struggles of women to return to work may also be less transitory than expected. Not just inflation.

And that adds to the full employment narrative – and expectations that the Fed raises rates even before June 2022. 

Information on these pages contains forward-looking statements that involve risks and uncertainties. Markets and instruments profiled on this page are for informational purposes only and should not in any way come across as a recommendation to buy or sell in these assets. You should do your own thorough research before making any investment decisions. FXStreet does not in any way guarantee that this information is free from mistakes, errors, or material misstatements. It also does not guarantee that this information is of a timely nature. Investing in Open Markets involves a great deal of risk, including the loss of all or a portion of your investment, as well as emotional distress. All risks, losses and costs associated with investing, including total loss of principal, are your responsibility. The views and opinions expressed in this article are those of the authors and do not necessarily reflect the official policy or position of FXStreet nor its advertisers. The author will not be held responsible for information that is found at the end of links posted on this page.

If not otherwise explicitly mentioned in the body of the article, at the time of writing, the author has no position in any stock mentioned in this article and no business relationship with any company mentioned. The author has not received compensation for writing this article, other than from FXStreet.

FXStreet and the author do not provide personalized recommendations. The author makes no representations as to the accuracy, completeness, or suitability of this information. FXStreet and the author will not be liable for any errors, omissions or any losses, injuries or damages arising from this information and its display or use. Errors and omissions excepted.

The author and FXStreet are not registered investment advisors and nothing in this article is intended to be investment advice.

Feed news

Latest Forex Analysis

Latest Forex Analysis

Editors’ Picks

EUR/USD slides sub-1.1300 as the dollar accelerates advance

EUR/USD finally broke below 1.1300, helped by encouraging US employment-related figures ahead of the November jobs report. ECB officials still holding back on tapering.


GBP/USD clings to modest recovery gains above 1.3300

GBP/USD is edging higher toward 1.3330 in the second half of the day on Thursday as the greenback stays under modest selling pressure. The US Department of Labor reported that there were 222,000 initial claims for unemployment benefits last week.


Gold: Pressure persists November low at risk of giving up

Gold fell to a 1-month low of $1,763.33 a troy ounce, bouncing just modestly from it and currently trading around 1,767.00. The bright metal weakened the most during US trading hours, as the American dollar met some market’s favour. 

Gold News

Litecoin price must hold critical support to avoid crash to $100

Litecoin price shows significant weakness on its daily chart, with the current support at $200 showing signs of failure. Litecoin price is currently trading against some strong support at the $200 level, though the support is unlikely to hold and more downside is expected.

Read more

Cyber Monday 2021 Discounts!

Glued to your trading screen on Cyber Monday? Upgrade your skills by signing up for FXStreet’s Premium service, offered at a discount of up to 50%. Fellow traders have already taken advantage of Black Friday profits. What about you? 

Subscribe now!