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Talking Points:

US economy added +142K jobs in September, nearly -60K below the forecast.

Unemployment rate steady only as participation rate decreases; wage growth dries up.

EURUSD trades as high as as $ 1.1316 after the report.

It might be time to put a pin in hopes for the Federal Reserve to raise rates in 2015. With the US labor market having been the sole pillar of fundamental strength supporting the US Dollar over the last year, the strongest talking point for a rate hike just took a significant hit. The September US labor market report was disappointing all around, arguably the worst report in recent memory – the worst perhaps since the May 2012 report that paved the way for QE2.

The US economy endured the second consecutive month of jobs growth below +200K, all but erasing the potential for a Fed rate hike this year. Earlier this week, there was over a 42% chance of a rate hike in December, per the Fed funds futures contracts. After the report today, that probability dipped to 30% (and falling).

Here are the data that’s sent the US Dollar to fresh daily lows:

– USD Change in Nonfarm Payrolls (SEP): +142K versus +201K expected, from +136K (revised lower from +173K).

– USD Unemployment Rate (SEP): 5.1% as expected unch.

– USD Labor Force Participation (SEP): 62.4% from 62.6%.

See the DailyFX economic calendar for Friday, October 2, 2015

EURUSD 1-minute Chart: October 2, 2015 Intraday

Worst US Jobs Report of 2015 Sinks USD/JPY, Supercharges EUR/USD

After the data releases, the US Dollar saw precipitous decline across the board, and has yet to recover. EURUSD initially jumped from $ 1.1150 to as high as $ 1.1316, and was last trading at $ 1.1288. Meanwhile, USDJPY sank to as low as ¥118.95 from ¥120.32, and was trading at ¥119.08 at the time this report was written.

Read more: Trade Setups in USD-pairs around September US NFPs

— Written by Christopher Vecchio, Currency Strategist

To contact Christopher Vecchio, e-mail [email protected]

Follow him on Twitter at @CVecchioFX

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