Dollar Soars After NFP, Market Readies for December Hike

The US dollar surged 1.5 percent versus the euro and soared against other major currencies as well today after the release of very strong non-farm payrolls. Now, the market is pricing in a December rate hike that looks very probable.
US non-farm payrolls jumped by 271,000 in October, demonstrating the far bigger rate of growth than the predicted 181,000 and the previous month’s 137,000. The unemployment rate ticked down by 0.1 percentage point to 5.0 percent, in line with expectations. Average hourly earnings were up 0.4 percent, two times the predicted rate of increase.
The amazing growth date led to the widespread belief among market participants that the Federal Reserve will lift interest rates in December. Just a few weeks ago the CME FedWatch was showing just about 30 percent probability of a December hike. Yet now it shows a 70 percent chance.
EUR/USD sank from 1.0882 to 1.0735 as of 15:00 GMT today. GBP/USD tumbled from 1.5207 to 1.5068 while USD/JPY climbed from 121.73 to 122.84.

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