US dollar under heavy pressure after disappointing employment report

Weaker-than-expected September US employment report weighs on

…equity markets and….

… pushes German Bund and US Treasury yields down, while also hurting the US dollar

Reflecting lower expectations of a Fed rate hike and growth fears

 

The September US employment report came in below market expectations. As a result, financial markets have further scaled back expectations of a rate hike. The probability of a rate hike in December is now 27% compared to 38% earlier in the week. As a result, equity markets came under pressure and yields on US Treasuries and German bunds moved lower. This reaction reflects a combination of lower expectations of a rate hike combined with growth worries. In addition, the US dollar fell across the board. USD/JPY dropped towards the low 119s while EUR/USD jumped towards 1.13. After being under pressure up to the report, gold, silver and platinum prices rallied substantially. Gold jumped from USD 1,107 to 1,135 or +2.5%  silver jumped from 14.45 to 15.02 (+4%) and platinum prices recovered by 1.6%. The risk has increased for a later than December rate hike.