NFP Quick Analysis: Stocks set to squeeze as labor market tightens, green light for greenback gains


  • The US gained 261K jobs in October, above early estimates. 
  • Ongoing expansion of the labor market means a lower chance of slower inflation. 
  • The Fed is set to continue raising interest rates toward a higher peak.

Very premature to even think about pausing – this is a short version of the hawkish message by Federal Reserve Chair Jerome Powell's message on Wednesday. The jobs report vindicates his words. It gives the dollar fresh wings and further hits US stocks. The good news for the economy is bad news for equities. 

Nonfarm Payrolls showed an increase of 261,000, on top of 315,000 in September, an upward revision. Another positive is an increase in wages, 0.4% MoM, above 0.3% expected, while yearly wages met estimates with 4.7%.

The only disappointment came from the rise of the unemployment rate to 3.7%. However, in absolute terms, it is still extremely low – reflecting a tight labor market. The jobless rate is calculated using a different survey, adding to a bit of confusion. 

Nevertheless, the Fed wants to see pain, and it is hard to find much hurting in this NFP. While monetary policy works with a lag, America's job gains are still above 200,000 – pre-pandemic levels. That means ongoing inflationary pressures and a higher peak rate, as Powell stressed on Wednesday. 

The market reaction has been mixed due to optimism about China's reopening and some fatigue from the previous trends. Nevertheless, the dollar looks strong and stocks have limited Chinese fuel to run on.

What's next? I am circling Thursday, November 10, as a critical date on the calendar. That is when the US releases the Consumer Price Index (CPI) numbers for October, and the focus on price rises makes this report more significant than the jobs report. The economic calendar is pointing to a high level of 0.5% MoM in Core CPI. Without a drop, the dollar is set to extend its gains.

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.

Recommended Content


Recommended Content

Editors’ Picks

EUR/USD stays defensive near 1.0700 amid USD strength, EU political jitters

EUR/USD stays defensive near 1.0700 amid USD strength, EU political jitters

EUR/USD is trading close to 1.0700, struggling to build on the previous bounce early Monday. European political uncertainty continues to undermine the Euro and cap the pair's upside. The US Dollar tracks the Treasury bond yields higher amid a cautious mood, weighing on the pair. 

EUR/USD News

GBP/USD remains pressured toward 1.2650 on firmer US Dollar

GBP/USD remains pressured toward 1.2650 on firmer US Dollar

GBP/USD is dropping toward 1.2650 in the European trading hours on Monday. The hawkish Fed expectations and a softer risk tone favor the US Dollar, exerting downward pressure on the pair. Fedspeak remains next in focus. 

GBP/USD News

Gold sellers regain control, eye a sustained move below $2,300

Gold sellers regain control, eye a sustained move below $2,300

Gold price is reversing a part of Friday’s upswing, having faced rejection once again above the $2,330 level early Monday. Gold price fails to benefit from a pause in the US Dollar upsurge, as the US Treasury bond yields recover after last week’s downward spiral.  

Gold News

Bitcoin retesting its major resistance level

Bitcoin retesting its major resistance level

Bitcoin price is retesting its weekly resistance level of $67,147. Ethereum price finds support around $3,321, the price imbalance between $3,146 and $3,498. Ripple price faces rejection due to the key resistance level of $0.499.

Read more

Weekend digest and a quiet start to the week

Weekend digest and a quiet start to the week

It will be a quiet start to the week on the data front. From Sweden, we get the Riksbank's Business Survey. Overnight, the RBA is widely expected to leave monetary policy unchanged. Markets price in the first rate cut only for May 2025. 

Read more

Majors

Cryptocurrencies

Signatures