US Economic Data Prompts Traders to Scale Back October Fed Hike Expectations
| Pair | Now | Since publish |
|---|---|---|
| EURUSD | — | — |
| USDJPY | — | — |
- Traders significantly reduced October Fed hike bets after weak US jobs and PCE data.
- The US economy added only 29,000 jobs in September, missing estimates.
- US Dollar fell; emerging market currencies gained relief.
Market participants have significantly pared back expectations for a Federal Reserve interest rate hike in October following recent weaker-than-expected US economic data. The September nonfarm payrolls report showed the US economy added only 29,000 jobs, falling short of all economist estimates and accompanied by downward revisions to prior months’ figures. This, coupled with a less-than-expected acceleration in the Fed’s preferred inflation measure, has led bond and currency traders to trim bets on further monetary tightening this year. The US Dollar reacted by falling to a session low, while emerging market currencies climbed, finding relief from eased rate fears. The CME FedWatch tool now indicates a low probability, around 17%, for a rate increase in October, with market focus shifting to upcoming September CPI data.