Strong US Jobs Data Boosts Dollar and Fed Hike Bets

A robust US Nonfarm Payrolls report fueled a significant rally in the US Dollar, which strengthened against a range of major currencies including the euro, British pound, Japanese yen, and Canadian dollar. The strong labor market data solidified investor expectations for further monetary tightening by the Federal Reserve. This sentiment was reinforced by a Fed official who noted that the public remains concerned about current inflation levels, even as expectations are anchored.

Asian Physical Gold Demand Strengthens

Physical gold demand saw an uptick in key markets, with a price dip in India prompting increased buying ahead of the Diwali festival season. On a broader scale, governments outside of the G7 have reportedly been increasing their gold reserves as a safeguard against future financial instability. However, some analysts point to long-term structural economic challenges in India that could potentially influence its growth trajectory.

Global Central Banks Show Divergent Policy Stances

Central banks outside the United States are pursuing varied monetary policies, creating a contrast with the hawkish outlook for the Federal Reserve. While the Bank of England delivered a hawkish rate hike, officials also indicated that policy could be held or even eased if economic growth stalls next year. Meanwhile, Mexico’s central bank cut its policy rate, and the Czech National Bank’s recent interest rate increase was met with debate about the future path of its policy.