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    European Session – Dollar hammered by dismal US nonfarm payrolls report

    The US dollar started the day strongly but this soon reversed rapidly after the dismal US jobs report. The nonfarm payrolls report showed that the US economy created 142,000 jobs in September. This was much worse than what the 201,000 economists had forecast – which was around 200,000 jobs. August was downwardly revised to 136,000 from 173,000. Average hourly earnings were flat month-on-month but were expected to rise 0.2%. Meanwhile, the unemployment rate stayed unchanged at 5.1%.

    Other US data added to the gloomy outlook as factory orders fell 1.7% in August, which was more than the 1.3% drop that was forecast. July was revised to 0.2% from a prior 0.4%.

    The poor US unemployment report and factory orders data will put a dent into any expectations of a rate hike in the next Fed meeting and will most likely push them back to December now.

    The dollar tumbled immediately after the data against most major counterparts. Against the yen it fell to 118.87, losing the key 120 yen handle again. The euro rallied to 1.1314, moving off an earlier session low of 1.1149.

    Sterling also moved higher to reach a peak of 1.5236 after the US jobs data. The pound was already driven higher earlier in the session by a stronger UK construction PMI. The September reading came in at 59.9, the strongest number in seven months and up from the August result of 57.3. Expectations were for an outcome of 57.5.

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