US Dollar Hits 18-Month High as Traders Brace for September Jobs Report

The US dollar is ending the week close to its strongest level in a year and a half. On Thursday the Dollar Index (DXY), which tracks the greenback against six major currencies, climbed to 102.20, a level last seen in April 2025. By Friday morning in Europe it had slipped back under 102.00, trading near 101.88, as traders squared positions before the September employment report.

That report, due at 12:30 GMT (8:30 a.m. in New York), is now the single biggest event on the calendar. A strong number would support the case for another Federal Reserve rate hike; a weak one could cut the rally short.

Why the dollar has been climbing

Three forces have pushed the greenback higher since early September. US inflation came in hot in August, and the Fed answered with a rate hike on 16 September that markets read as hawkish. Treasury yields then surged, with the 10-year note rising to around 5.33% on Thursday, its highest level in about two decades. Higher yields make dollar assets pay more, so global money flows towards them.

Growth data has helped as well. The Atlanta Fed's GDPNow model estimates third-quarter growth at 3.7% annualised, up from 2.2% in the second quarter. An economy running that hot gives the Fed little reason to ease, and futures markets now imply about 75 basis points of further hikes over the next twelve months.

Oil adds a final push. Tension around the Strait of Hormuz has kept crude prices high for months, lifting inflation fears in Europe and Asia more than in the US, which produces much of its own energy. Each jump in oil therefore tends to favour the dollar over the euro and the yen.

What the dollar did against each major currency this week

Gains were broad but uneven. Commodity currencies and the euro took the heaviest hits, while sterling and the Swiss franc held up best.

Source for weekly changes: FXStreet's currency heat map as of Friday morning, 2 October.

What to expect from the jobs report

Economists polled ahead of the release expect non-farm payrolls to rise by 90,000 in September, a sharp slowdown from August's 162,000. Unemployment is forecast to stay at 4.1% and average hourly earnings to rise 0.3% on the month.

Several private gauges point lower than the consensus. Bloomberg's whisper number sits at 84,000, and the ADP and Revelio Labs private payroll series together imply about 67,000. TD Securities is more downbeat still, forecasting 50,000 new jobs and a rise in unemployment to 4.2%.

Wages may matter as much as the headline. A 0.3% monthly gain would keep annual pay growth in a range the Fed sees as too warm for inflation to fall back to 2%. Wages up 0.4% would likely revive bets on an October hike, even if job creation disappoints.

• Strong report (above 120,000 jobs, wages 0.4% or more): yields likely rise again and the DXY could retest 102.20.
• In line (around 90,000, wages 0.3%): a short spike in volatility, then the market turns to Fed speakers.
• Weak report (below 50,000, unemployment 4.2% or higher): the dollar could give back part of the week's gains, with EUR/USD and gold the likely winners.

What Fed officials are saying

Comments this week have cooled expectations for an October move without ruling one out. Minneapolis Fed President Neel Kashkari said inflation is "still too high at around 3%" and pencilled in one more hike this year and another in 2027. Governor Michael Barr also signalled that further increases may be needed to bring sticky inflation down.

Pricing has swung sharply. Early in the week markets put the odds of an October hike above 70%, according to Convera's October outlook; softer inflation data and more cautious Fed remarks then pulled that lower. Friday's numbers will decide which way it moves next. The Fed's next decision comes on 28 October.

How to trade the release

Payroll Fridays bring some of the fastest moves of the month. Spreads widen in the seconds around the release, and stop orders can fill far from where you set them. You can reduce the damage with a few simple habits.

• Cut your position size or step aside for the first five minutes after 12:30 GMT.
• Check how far your broker's spread widens around news; some accounts widen far more than others.
• Watch revisions to August's 162,000. A big downward revision can flip the reaction even if September looks fine.
• Use our economic calendar for the exact time in your zone and the next releases.

Key levels for the dollar

For the Dollar Index, Thursday's 102.20 high is the first resistance, with 102.00 acting as a pivot. Support sits near 101.50, then around 101.00. A daily close above 102.20 would confirm the uptrend that began in early September; a drop below 101.00 would be the first sign that the rally is fading.

Gold trades just under $4,200 an ounce and has struggled to rise while yields climb. A soft jobs number would give it room to recover; a hot one would keep it capped. Track every pair in real time on our live rates page.

Frequently asked

Sources: FXStreet: Forex Today, 2 Oct · BBH via FXStreet · Convera October outlook · US Bureau of Labor Statistics