Geoffrey Smith 

Investing.com — On Monday the dollar rose against higher-yielding currencies, but fell against sterling and the euro on Monday. Friday’s job report leaves significant uncertainty about when the Federal Reserve will raise interest rates. 

This year’s jobs report was weakest, only 194,000 jobs were added to nonfarm, which is well below consensus. A big upward revision to August’s data softened the disappointment a little, but average earnings came in above expectations,  increasing fears that inflation may strengthen at the same time as growth slows due to constraints in both global supply chains and local labor markets. The data did not suggest that the Fed would stop buying bonds next month.

The exchange rate that measures the dollar against currencies from advanced economies was at 94.073 by 3:10 PM ET (0610 GMT). It had not moved beyond the September high due to Friday’s jobs report. Due to high commodity prices around the world, which require dollars for trade settlement, the dollar gained 0.4% against the Japanese yen and 0.3% against New Zealand dollar. 

After comments by two Bank of England senior officials, including Governor Andrew Bailey, at the weekend it fell against the pound. These statements indicated clearly that the Bank plans to increase its interest rates. The U.K. has seen inflation expectations rise to more than 4% in five years, which is a surprising development considering the country’s scarcity of experience with stagflation since the 1970s. 

Bailey told the Yorkshire Post in an interview that “obviously” he is “concerned” at above-target inflation, adding that: “We are going to have a very delicate and challenging job on our hands so we have got to in a sense prevent the thing becoming permanently embedded because that would obviously be very damaging.”

Michael Saunders his colleague, however, stated to the Sunday Telegraph that rate increases could be “significantly sooner” in the United Kingdom. Since the outbreak of the pandemic, the Bank has maintained a key rate at 0.1%.

Sterling rose 0.4%, to 1.1804 Euro against the euro. It also rose 0.4% against dollar to $1.3664. 

As crude oil prices held steady at well over $80/barrel, the strong trend in oil-themed currency currencies continues. With 71.6724 against the US dollar for 14 months, the Russian ruble hit a new high of 71.6724. The Canadian dollar was at its two-month best after posting a stronger labour market report Friday. Canada created 157,000 additional jobs in September, and is now able to replace all of its jobs that were lost during the pandemic. 

The Columbus Day holiday will cause slight volatility in U.S. stock markets. Speeches from Frank Elderson, the chief economist of the European Central Bank, and Philip Lane, the chief economist at the European Central Bank will also be screened for signs that the ECB – which is becoming an anomaly to global trends of monetary tightening — may be starting to respond to rising inflationary pressure.