Dollar Jumps as 165,000 October Jobs Smash Forecasts and Feed December Hike Bets

The US dollar surged on Friday, November 6, after the American economy added 165,000 jobs in October — nearly three times the 65,000 economists polled by Reuters had expected. The dollar index climbed 0.77% to 102.26, its biggest daily gain since June 17, while the euro tumbled 0.67% to $1.1144 and sterling fell 0.71% to $1.3355. The unemployment rate dipped to 4.1% from 4.2%, and the report rebuilt the case for another Federal Reserve rate rise in December, with futures markets putting the chance of a quarter-point move near 80%, up from about 67% the day before.

The details were stronger than the headline. September’s gain was revised up to 60,000 from 29,000, and August’s to 186,000, adding 84,000 jobs to the earlier picture. Private employers added 159,000 jobs, led by professional and business services with 70,000 and healthcare with 41,600, while manufacturing added 19,000 — its fifth straight monthly gain after three years of decline. Temporary help and transport added jobs too; leisure and hospitality shed 13,000. Average hourly earnings rose 0.4% on the month and 3.1% on the year, ahead of the 2.9% consensus.

Look past the headline, though, and the report is less one-sided than the dollar’s jump suggests. The broad U6 jobless measure, which counts discouraged workers and part-timers who want full-time work, climbed from 7.6% to 7.9%, and the number of people working part-time for economic reasons jumped by 339,000 to 4.84 million — a sign some employers are cutting hours rather than heads. Wage growth of 3.1% is also trailing energy-driven price rises, with petrol above $4 a gallon, so the hiring boom has yet to close the gap in real incomes. That mix — strong hiring beside cooling hours — is why the Fed still has a genuine debate.

The move owed much to the contrast with the day before, when the Nasdaq suffered its worst one-day fall in 19 months and roughly $3 trillion was wiped from US stocks on fears of tougher rules for artificial intelligence and data centres after the Democratic midterm wins. Hike expectations had slipped to almost a coin toss. The jobs data flipped that mood: the two-year Treasury yield rose to 4.52%, and three Fed officials spoke in the same direction on Friday: New York Fed President John Williams said inflation is still too high, St. Louis President Alberto Musalem called it a top concern, and San Francisco President Mary Daly said rates will likely still need to rise despite the “painful” tech sell-off. ING now expects a December rise then a long pause, and markets no longer fully price another increase in 2027. For traders, the lesson is that the dollar can switch drivers in a day — safe haven one day, rate expectations the next — and both were at work in the forex market this week.

What to watch next arrives within days. October’s US consumer price report lands on Tuesday, November 10 — the last inflation reading before the Fed’s December 8—9 meeting — and the November jobs report follows on December 4. A hot CPI reading would lock in the December hike; a soft one would reopen the debate and hand the euro and pound room to recover. The weekly scoreboard already favours the greenback: the dollar ended the week up 0.3%, the euro fell for a third straight week, sterling for the first week after three gains, and the yen had its worst week since September. Until Tuesday’s inflation data, position sizing matters more than prediction — our forex tools include calculators for planning risk before trading. (Not financial advice.)