Investing
Sterling falls below $1.60 as jobs data brings US rate hike nearer
The pound dropped to its lowest rate against the dollar in almost a year this afternoon after the US unemployment rate fell below 6 per cent, triggering a further rally for the dollar.
After disappointing employment growth for August, US employers added a higher-than-forecasted 248,000 jobs in September, according to the Bureau of Economic Analysis.
August’s figure was revised up from 142,000 to 180,000, with July’s revised from 212,000 to 243,000.
The jobless rate fell to 5.9 per cent, the lowest level since July 2008, increasing expectations of an earlier-than-expected US rate hike.
The dollar surged against both sterling and the euro on the news, pushing the pound below the $1.60 mark for the first time since November 2013.
Gold, meanwhile, fell below $1,200 a troy ounce, its lowest level since last December, while 10-year treasury yields rose slightly from 2.42 per cent to 2.46 per cent.
“[The report] boosts the chances that the Fed will first raise rates in March of next year rather than waiting until June,” said Capital Economics’ senior US economist Paul Dales.
“If payrolls continue to rise by 250,000 a month and the unemployment rate continues to fall, higher wage growth may not be need to prompt the Fed to hike rates.”
One aspect of today’s report continues to disappoint, however, the US labour force participation rate fell again to 62.7 per cent, the lowest it has been since 1978.
