US Dollar Ends Week as Strongest Currency Despite Falling Employment

The US dollar ended the week as the strongest major currency as market participants considered an interest rate hike from the Federal Reserve in December almost guaranteed.

Nonfarm payrolls provided a nasty surprise, showing the first decline of employment since September 2010. Yet the report explained that the reading was heavily influenced by two hurricanes, thus markets disregarded the drop as just a temporary phenomenon. Other components of the report were very good as the unemployment rate dropped unexpectedly and wage inflation accelerated.

Overall, investors received the data fairly positively, and increased bets on a December hike above 90%. Moods soared a bit, though, after reports that North Korea is preparing another nuclear missile test and is able to strike at the United States.

Meanwhile, in Europe mood was far from good as the Catalan independence referendum resulted in a violent response from the Spanish government. The escalating political crisis causing concerns about stability of the European Union.

The United Kingdom had its own problems with calls for Theresa May to step down from the Prime Minister office just as the Brexit negotiations with the EU were becoming more and more complicated.

EUR/USD dropped from 1.1789 to 1.1731, touching the weekly low of 1.1675. GBP/USD slumped as much as 2.3% from 1.3372 to 1.3065. USD/CHF rallied from 0.9685 to 0.9779.

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