U.S. Payrolls Slow: October Jobs Report to Shape Fed Policy, USD, Gold, and Stocks

• Hurricanes Helene and Milton: These storms could subtract as much as 50,000 jobs from the total, based on Goldman Sachs estimates.
• Boeing Strike: The labor strike sidelined 41,000 workers, further reducing payroll gains.

Despite anticipated weaker job additions, the unemployment rate is expected to hold at 4.1%, while wages are forecasted to increase by 0.3% month-over-month and 4% year-over-year, suggesting inflation pressures remain contained.

Pre-NFP Indicators Show Labor Market Resilience

October’s labor data comes amid strong preliminary indicators:

However, job growth is increasingly concentrated in sectors like health care and government, suggesting a more narrow expansion in the labor market.

Implications for Fed Policy and the U.S. Dollar

Friday’s report will be crucial in guiding Fed rate expectations, as market participants currently anticipate two rate cuts by year-end. A weaker-than-expected NFP report could push the Fed toward easing sooner, while a stronger report might delay rate reductions:

• Sub-100,000 Payroll Growth: A weaker NFP report could trigger a U.S. dollar pullback as traders anticipate faster Fed action.
• Above 113,000 Jobs: A stronger report would likely support the dollar’s strength as Fed rate cuts become less certain.

Potential Reactions in Treasury Yields, Bitcoin, Gold, and Stocks

Several asset classes could respond sharply to the NFP data:

• Treasury Yields: Yields may fall on weak payrolls due to increased bond demand, while a stronger report could push yields higher.
• Bitcoin: A weaker dollar on soft jobs data might support Bitcoin, but a stronger dollar could pressure the asset.
• Gold: Likely to rise on weaker jobs data as a hedge against Fed cuts; a stronger dollar could dampen this effect.
• U.S. Stocks: Weak job growth may support equities on hopes for Fed easing, while strong data could pressure interest-sensitive sectors.

Market Forecast: Cautious Dollar Outlook

Friday’s report is likely to drive dollar and bond market volatility, with weaker jobs data hinting at near-term Fed support and likely pulling the dollar down. Conversely, stronger-than-expected job growth could keep the dollar buoyant as markets anticipate a resilient U.S. economy.