Forex Today: US Dollar consolidates weekly gains ahead of critical Nonfarm Payrolls data
Here is what you need to know on Friday, October 2:
The US Dollar (USD) corrects lower against its major rivals early Friday as investors gear up for the critical employment report for September, which will feature Nonfarm Payrolls (NFP), wage inflation and Unemployment Rate figures. Ahead of this release, the European economic calendar will offer Harmonized Index of Consumer Prices (HICP) data for September.
US Dollar Price This week
The table below shows the percentage change of US Dollar (USD) against listed major currencies this week. US Dollar was the strongest against the Euro.
| USD | EUR | GBP | JPY | CAD | AUD | NZD | CHF | |
|---|---|---|---|---|---|---|---|---|
| USD | 1.07% | 0.19% | 0.30% | 0.57% | 1.02% | 0.82% | 0.09% | |
| EUR | -1.07% | -0.94% | -0.71% | -0.51% | -0.05% | -0.26% | -0.99% | |
| GBP | -0.19% | 0.94% | 0.02% | 0.40% | 0.85% | 0.65% | -0.09% | |
| JPY | -0.30% | 0.71% | -0.02% | 0.18% | 0.65% | 0.44% | -0.31% | |
| CAD | -0.57% | 0.51% | -0.40% | -0.18% | 0.48% | 0.22% | -0.47% | |
| AUD | -1.02% | 0.05% | -0.85% | -0.65% | -0.48% | -0.21% | -0.94% | |
| NZD | -0.82% | 0.26% | -0.65% | -0.44% | -0.22% | 0.21% | -0.72% | |
| CHF | -0.09% | 0.99% | 0.09% | 0.31% | 0.47% | 0.94% | 0.72% |
The heat map shows percentage changes of major currencies against each other. The base currency is picked from the left column, while the quote currency is picked from the top row. For example, if you pick the US Dollar from the left column and move along the horizontal line to the Japanese Yen, the percentage change displayed in the box will represent USD (base)/JPY (quote).
Surging US Treasury bond yields boosted the USD on Thursday, with the USD Index reaching its highest level since April 2025 at 102.20. In the European morning on Friday, the USD Index stays in negative territory below 102.00. Investors expect NFP to rise by 90K in September following August's impressive 162K increase. In this period, the Unemployment Rate is forecast to remain unchanged at 4.1%.
US payrolls seen soft but TD Securities urges looking through dovish signal
According to TD Securities, September US payrolls are likely to show a marked loss of momentum, with "September NFP likely moderated to 50k, with the UE rate rising to 4.2%." The bank expects the softness in hiring to be concentrated outside "healthcare and leisure & hospitality," while "flat government will be weighed down by a reversal in local hiring." At the same time, TD anticipates that "the UE rate likely moved higher to 4.2% along with participation, and AHE was likely subdued at 0.1% m/m (3.0% y/y)." However, TD stresses that it would "look through dovishness in the report due to seasonal factors and rising participation," suggesting that a seemingly benign wage and employment print may overstate any underlying cooling in labour-market conditions.
EUR/USD lost about 0.8% on Thursday and came in within a touching distance of 1.1200. In addition to the broad USD strength, widening France-German 10-year bond yield spread due to the uncertainty surrounding France's fiscal outlook, caused the Euro (EUR) to weaken and dragged the pair lower.
Euro under pressure as ECB hike prospects dim amid market stress
Analysts at Deutsche Bank note that the recent bout of financial stress has “led to growing doubt whether central banks like the European Central Bank (ECB) could hike rates as aggressively as thought.” They add that “tighter financial conditions would do some of the work for them in bringing down inflation, and the selloff also raised doubts as to whether the economy could cope with another hike,” underscoring how market turbulence is increasingly seen as a substitute for further policy tightening.
USD/JPY rose nearly 0.5% on Thursday before entering a consolidation phase and retreating below 158.00 on Friday. During the Asian trading hours, the data from Japan showed that the Tokyo Consumer Price Index (CPI) rose by 2.7% on a yearly basis in September, surpassing the market expectation of 1.9% by a wide margin.
GBP/USD dropped to its lowest level since late June below 1.3200 on Thursday. In the European morning on Friday, the pair stages a modest rebound and trades slightly above 1.3210, rising about 0.2% on the day.
Gold (XAU/USD) managed to register marginal gains on Thursday as the precious metal captured capital outflows out of the Euro and the British Pound, with XAU/EUR and XAU/GBP pairs both rising about 1%. Early Friday, XAU/USD stays relatively quiet and trades slightly below $4,200.
Nonfarm Payrolls FAQs
Nonfarm Payrolls (NFP) are part of the US Bureau of Labor Statistics monthly jobs report. The Nonfarm Payrolls component specifically measures the change in the number of people employed in the US during the previous month, excluding the farming industry.
The Nonfarm Payrolls figure can influence the decisions of the Federal Reserve by providing a measure of how successfully the Fed is meeting its mandate of fostering full employment and 2% inflation. A relatively high NFP figure means more people are in employment, earning more money and therefore probably spending more. A relatively low Nonfarm Payrolls’ result, on the either hand, could mean people are struggling to find work. The Fed will typically raise interest rates to combat high inflation triggered by low unemployment, and lower them to stimulate a stagnant labor market.
Nonfarm Payrolls generally have a positive correlation with the US Dollar. This means when payrolls’ figures come out higher-than-expected the USD tends to rally and vice versa when they are lower. NFPs influence the US Dollar by virtue of their impact on inflation, monetary policy expectations and interest rates. A higher NFP usually means the Federal Reserve will be more tight in its monetary policy, supporting the USD.
Nonfarm Payrolls are generally negatively-correlated with the price of Gold. This means a higher-than-expected payrolls’ figure will have a depressing effect on the Gold price and vice versa. Higher NFP generally has a positive effect on the value of the USD, and like most major commodities Gold is priced in US Dollars. If the USD gains in value, therefore, it requires less Dollars to buy an ounce of Gold. Also, higher interest rates (typically helped higher NFPs) also lessen the attractiveness of Gold as an investment compared to staying in cash, where the money will at least earn interest.
Nonfarm Payrolls is only one component within a bigger jobs report and it can be overshadowed by the other components. At times, when NFP come out higher-than-forecast, but the Average Weekly Earnings is lower than expected, the market has ignored the potentially inflationary effect of the headline result and interpreted the fall in earnings as deflationary. The Participation Rate and the Average Weekly Hours components can also influence the market reaction, but only in seldom events like the “Great Resignation” or the Global Financial Crisis.
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