The dollar index fell to 97.7 on Friday as disappointing US labor data reignited expectations for multiple Fed rate cuts. Nonfarm payrolls rose by just 22,000 in August, while the unemployment rate climbed to 4.3%, its highest since 2021. Markets now expect the Fed to cut rates this month and deliver a total of three reductions in 2025.
The 10-year US Treasury yield dropped sharply to 4.10%, a five-month low, as investors sought safety. The steepening yield curve and mounting political risks added to demand for Treasuries.
Gold surged to a fresh record of $3,595 per ounce, rising nearly 3% on the week amid heightened rate-cut expectations and broader risk aversion. Silver climbed toward $41, driven by industrial demand and falling real yields.
Gold hit an all-time high of $3,595 per ounce, rising over 1% on Friday alone, as US jobs data weakened the dollar and increased rate-cut expectations. Fed officials have signaled openness to easing, with around 66 bps of cuts now priced for 2025. A steepening yield curve, political risks, and Fed credibility concerns supported safe-haven demand.
Silver neared $41 per ounce, approaching its 2011 highs, as real yields declined and industrial demand surged. Solar and EV sectors continued to drive consumption, while constrained supply added to the upside, reinforcing the metal’s structural deficit outlook for 2025.
US Dollar: The dollar index slid to 97.7, its lowest in weeks, following soft payrolls and rising unemployment. The data triggered a drop in short-term yields and reinforced expectations for Fed easing. Markets now see three cuts in 2025. Fed credibility also came under scrutiny amid growing political pressure.
Euro: The euro climbed above $1.17, its strongest level since July. The single currency benefited from broad dollar weakness and steady inflation, with Eurozone CPI at 2.1%. The ECB is expected to hold rates steady in next week’s meeting. German and French political developments remain in focus.
British Pound: The pound rose above $1.35, supported by dollar softness, though fiscal concerns capped gains. With the Autumn Budget approaching, investors remain wary. Despite the week’s volatility, sterling is still down 0.3% on the week.
Japanese Yen: The yen strengthened toward 148 per dollar, reversing recent losses. The move was aided by reduced US auto tariffs and improved real wage data. These factors strengthened the case for a hawkish BoJ stance, with Ueda leaving rate hikes on the table.
Oil inventories are nearing depletion, increasing supply risks and supporting prices. Aramco estimates less than 6 billion barrels remain after over 1 billion barrels were drawn this year, while the IEA is preparing a 100-million-barrel release. The US 10-year Treasury yield stabilized near 5.31% on Wednesday, close to 24-year peaks, as markets awaited the Fed's minutes.
The dollar index steadied around 102 on Tuesday, near its highest since April 2025, as the euro weakened on French fiscal and political concerns and Spain's upcoming snap election, yet stabilized near 1.1220 after touching its lowest level since May 2025.
Detail
Weak US Jobs Ease Fed Hike Bets (5 – 9 October)Weak US labor market data shifted the monetary policy outlook after September nonfarm payrolls rose by only 29,000, well below the 90,000 forecast, while prior months were revised lower. Unemployment rose to 4.2%, and wage growth slowed to 3.0%, cutting the probability of an October Fed hike to around 20%. The Dollar Index fell below 102 after the report, but remained on course for a third consecutive weekly gain.
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