Key Highlights

  • The US Dollar Index rose 0.6% to 102.2 on Friday, extending gains after October payrolls beat forecasts.
  • Nonfarm payrolls rose 165,000, more than double the 65,000 forecast, while Unemployment edged down to 4.1%.
  • Investors price a more than 76% chance of a quarter-point Fed hike at the Dec. 9 meeting.
  • Safe-haven Demand amid a global Equity sell-off over AI valuations and tighter regulation also supported the dollar.

The US dollar index rose 0.6% to 102.2 on Friday, extending gains after October employment data significantly exceeded forecasts. The dollar also reached its highest level since Oct. 29 as investors raised bets on a restrictive Federal Reserve stance.

Nonfarm payrolls increased by 165,000 in October, more than double the 65,000 forecast, while the unemployment rate edged down to 4.1% from 4.2%. Average hourly Earnings rose 0.4%, above the 0.3% forecast, and are up 3.1% from a year earlier.

Broad Job Gains Underpin the Move

Job gains were broad-based, led by professional and Business services, which added 70,000 jobs, and health care, which added 42,000. Transportation and Warehousing added 25,000 and Manufacturing 19,000. Payrolls for August and September were revised higher by a combined 84,000.

The figures reinforce evidence of a labor market supported by consumer spending and business investment. The household survey showed the labor force participation rate rising to 61.9% from 61.8%, and the number of unemployed falling by 41,000 to 7.07 million.

Fed Path in Focus Ahead of December

The stronger data reinforced expectations of a restrictive monetary stance from the Federal Reserve. Investors anticipate another Interest Rate increase in December to contain inflation. CME FedWatch data show a more than 76% chance of a quarter-point hike at the Dec. 9 meeting, up from more than 66% the day before.

The policy rate stands at 3.75% to 4.00% after a quarter-point increase in September. Policymakers receive one more employment report and a full set of Inflation data before their next meeting, with the November payrolls release due on Dec. 4.

Friday's cross-asset moves ran in the same direction. Gold fell 1.34% to USD 4,033 an ounce, and the 10-year Treasury Yield rose to 4.865%.

Safe-Haven Demand and the Equity Sell-Off

The dollar also benefited from increased safe-haven demand amid a global equity sell-off driven by concerns over AI valuations and tighter regulation. On Thursday, the Nasdaq, S&P 500 and Russell 2000 all logged their worst one-day loss since April 2025, according to FactSet data, and the Magnificent Seven lost more than USD 1 trillion in market value.

The sell-off followed the Democratic win of both chambers of Congress in the midterm elections, which stoked concern that Data Center construction could slow and that AI regulation could tighten. In Asia, Japan's Nikkei 225 entered a Bear Market and South Korea's Kospi plunged more than 6% on Friday.

Dollar Markers Ahead of December

The dollar index stands at 102.2 after a 0.6% gain, with the dollar at its highest since Oct. 29. The CME FedWatch probability of a hike stands above 76%. The data calendar before the Dec. 9 meeting includes the November jobs report on Dec. 4 and a full set of inflation data, and the fed funds range stands at 3.75% to 4.00%.