America barely added any jobs in September — and the dollar went up anyway.

The call

The numbers. 29,000 new jobs, when 89,000 were expected. Unemployment up to 4.2%. Pay growth almost flat. But company costs jumped in both business surveys.

What that does. Weak jobs normally mean a central bank stops raising rates. Rising costs mean it can't. The Fed is caught between the two — and its own minutes say most officials still want one more rise this year.

The rate. 3.75–4.00%. Nothing expected on 28 October. Around 80% chance of one more by December.

The currency. Higher rates make a currency worth more to hold, and December survived a bad jobs week. Dollar firm into 14 October.

The print

Jobs +29,000, against +89,000 expected. July revised down to −10,000.

Unemployment 4.2%, from 4.1%. Pay +0.1% on the month, against +0.3% expected.

Factory survey 54.5, services survey 54.9. Both slightly below forecast.

Why it matters

On the face of it that is a bad week for America, and a bad week for the dollar. It wasn't.

The reason is buried in the business surveys. The part that tracks what companies pay for materials shot up — the factory reading jumped nearly seven points in a month, and the services reading hit its highest since 2022. ISM's Steve Miller noted it has now been above 70 in six of the last seven months.

So companies have stopped hiring but their costs are still climbing. That is inflation arriving through tariffs and oil rather than through wages — and pay growth at 0.1% confirms wages aren't the cause.

For the Fed, that's the worst combination. It can't fix tariff costs by cutting, and it still has inflation at 3.4%. So it keeps going.

The case

A weak jobs number that doesn't change rate expectations isn't a dollar-negative event. October was never in play at 18%, and December held near 80% all week.

The dollar is the strongest of the majors this month, up 3.43%. What matters now is US inflation on 14 October. Those surging company costs point to a firm number.

Ideas

Nothing today. Expectations didn't move, so there's nothing to trade. The dollar becomes live on 14 October.

No clean pair even then. Every major has its own event before 28 October — Australian jobs on the 15th, New Zealand inflation the week of the 19th, Japanese inflation on the 23rd. Wait for the 14th, then pick the leg with the emptiest diary.

Sources

ISM Services, September · ISM Manufacturing, September · CNBC — September jobs report · Fed minutes and pricing via the 8 October scorecard