Payrolls rise just 29,000, knocking out October Fed hike bets

US nonfarm payrolls rose by just 29,000 in September, far short of the 90,000 consensus, and FXStreet said Friday's report knocked out bets on an October Fed hike. The dollar edged lower and the pound and the euro rebounded, but Treasury yields reversed higher later in the session, according to investingLive.

What the data showed

• US nonfarm payrolls rose by 29,000 in September against a 90,000 consensus, and ABN Amro's Rogier Quaedvlieg noted that earlier months were revised down by 60,000. The unemployment rate rose to 4.2% from 4.1%, where it had been expected to stay, and hourly pay grew 3.0% on the year against a 3.2% forecast, FXStreet reported.

• Tokyo's CPI rose 2.7% on the year in September, up from 1.9% in August, according to FXStreet, which cited Japan's Statistics Bureau. Core inflation, which leaves out fresh food, also reached 2.7% against a 2.4% forecast, and USD/JPY slipped below 158.00 on the release, FXStreet said.

• Eurozone flash inflation jumped to 3.8% in September from 3.2%, above forecasts of 3.6% to 3.7%, with energy prices driving it, according to investingLive, FXStreet and Action Forex. Core inflation rose to 2.5%, as expected.

The dollar, the Fed and yields

• Action Forex also said the soft report knocked out an October Fed hike, whose odds it had put at 77.5% on 24 September; by Friday morning, before the data, investingLive had them at about 28%. Investing.com reported the dollar edging lower after the release, a day after the dollar index set a yearly high; later in the session the index dropped below 102.00, FXStreet said.

• The ten-year Treasury yield held around 5.25% in the European morning, retreating from multi-decade highs as concerns over France's fiscal and political stability grew, according to FXStreet. Yields fell further after the payrolls, Investing.com reported, then reversed higher later in the US session, investingLive's Americas wrap said, adding that the Nasdaq 100 closed at a record.

The euro and the pound

• After Thursday's break below 1.13, EUR/USD slipped to around 1.1235 in Asian trading as concerns over France's finances extended the euro's fall, according to FXStreet, then edged back to around 1.1250. Hotter eurozone inflation did not lift it: the euro gave up that recovery after the release and slid to a two-and-a-half-month low against the pound, just above 0.8500, FXStreet said. EUR/USD touched an intraday low of 1.1221 and then rebounded to around 1.1260 after the jobs data, up 0.16% on the day at the time of FXStreet's report. On our feed it closed at 1.1252, above Thursday's 1.1244, ending a four-day losing streak.

• GBP/USD spent the European morning just above 1.3200, near three-month lows, and after the payrolls report was up more than 0.41% on the day as the US unemployment rate ticked up, FXStreet said. On our feed it closed at 1.3239, up 0.32% from Thursday's close.

Oil and metals

• WTI held near $92.00 early in Asian trading after two days of gains, then slipped below $91.00 in the European morning on reports of higher Gulf exports, FXStreet said. Brent fell back below $100, reversing much of Thursday's 5.5% rally on talk that EU countries would release emergency stocks, according to Action Forex.

• Gold failed at $4,200 again despite the payrolls miss, as Treasury yields climbed, FXStreet said. On our feed it spiked to $4,226 on the release, fell as low as $4,125 and closed at $4,148, down 0.69% from Thursday's close: the third day running that the $4,200 area turned it back.

• Silver fell about 0.76% as rising Treasury yields limited the dollar's decline, capping a weekly loss of about 6%, FXStreet said after the close.

Market gauges and what's next

Our proprietary metrics at the close of the session:

• Readings: an MRS of 69, unchanged from Thursday; a CTS of 54, with its carry component at 60, on a scale recalibrated on Friday that cannot be compared with earlier readings; and an FSI of 62, back in Greed after Thursday's 60, a rise that came from its news component.

• Top of our strength table: the euro, on top for 309 of the session's 1,440 minutes (21%), on the day it touched 1.1221 before rebounding. The yen, first in each of the previous two sessions, was second on 214.

• Bottom: no currency clearly trailed. The pound spent the most minutes in last place, 233 (16%), and the fewest on top, 77, on a day it closed 0.32% higher against the dollar on our feed. The table counts minutes in a place, not how far a currency moved.

• The dollar: seventh, on top for 153 minutes, while Investing.com had it heading for its first three-week winning streak since January.

• Last week's test: USD/JPY never got back above 159.02, the line our weekly wrap told readers to watch: on our feed its weekly high was 158.45, on Thursday, and on Friday it dipped to 156.95 after the payrolls before closing at 157.84. By the wrap's own test, the line held, with no intervention reported from Tokyo.

Next week: investingLive's preview puts the US ISM services report, the minutes of the Fed's September meeting and Canada's jobs report at the top of a lighter calendar.