The dollar slipped on Friday after September payrolls badly missed forecasts, while euro zone inflation jumped more than expected. EUR/USD stayed pinned near multi-month lows as weak U.S. jobs data and hot European price growth both hit the wires.
Payrolls miss pressures the dollar
U.S. nonfarm payrolls added just 29,000 jobs in September. Economists had forecast 89,000 new jobs. The unemployment rate rose to 4.2% from 4.1% in August, and average hourly earnings grew just 0.1% month-over-month, undershooting the 0.3% consensus. The dollar index dipped roughly 0.2% on the release, though it remained on track for a 1% weekly advance, its third straight weekly gain.
Traders responded by paring back Federal Reserve rate-hike bets. The chance of the Fed holding rates steady at its October meeting jumped to 72%, according to the CME FedWatch tool, up from 36% a week earlier. The benchmark 10-year Treasury yield dropped 6 basis points, to 5.170% from 5.230%, as fixed-income desks scaled back expectations for further tightening.
Euro zone inflation complicates the picture
Yet the euro gained less than 0.1% against the dollar, holding flat near its lowest level in over a year. The single currency remained on track to close the week down more than 1.2%, its worst weekly performance since May 2026.
The drag came from Europe's own price data. Euro zone headline inflation jumped to 3.8% in September from 3.2% the prior month, above the 3.6% forecast, driven mainly by natural gas and fuel costs. Core inflation, which strips out energy and food, edged up to 2.5% from 2.4% on higher service-sector costs. The acceleration strengthens hawkish calls on the European Central Bank for further rate hikes, following two increases over the summer.
Sources: Investing.com, Investing.com, InvestingLive
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