The dollar's rally had stalled, but its uptrend hadn't broken — that was the assessment from Brown Brothers Harriman going into the data, where strategist Elias Haddad noted the recent pause in both the greenback and the bond-market selloff came after three senior FOMC officials talked down the chances of a back-to-back rate hike in October.
The bigger picture, BBH argued, still favored the dollar. The uptrend began with August's hotter-than-expected inflation reading early last month and accelerated after the Federal Reserve's aggressive September 16 rate increase. Steady American growth, a firming jobs market, and inflation that refused to cool all kept the case for more tightening alive — until the payrolls miss landed.
The growth data backs that view. The Atlanta Fed's GDPNow model is tracking annualized third-quarter growth of 3.7% — well above the 2.2% pace of the second quarter. And fed funds futures still imply about 75 basis points of extra tightening across the coming twelve months — a market betting the Fed's job isn't done.
The near-term test was September payrolls, due at 1:30pm London time. Consensus expected 90,000 new jobs, down from 162,000 in August. The actual 29,000 print was the downside shock — and it went straight at the heart of BBH's thesis. Bloomberg's informal whisper estimate sat at 84,000, while private-sector gauges from ADP and Revelio Labs pointed closer to 67,000; even the bears didn't see 29K coming. In FX, the dollar's pre-release strength was already visible: EUR/USD had slipped to 1.1241, a drop of 0.76%, while USD/JPY held firm near 157.54.
Why it mattered
This was the clearest macro articulation of the dollar-bull case in weeks: not a single data point, but a sequence — hot inflation, a hawkish hike, above-trend growth tracking. The NFP miss broke the sequence. Dollar dips had been buying opportunities while the Fed's tightening path looked alive; with October hike pricing gutted, the burden of proof has flipped — the bulls now need incoming data to rebuild the case, and the next inflation prints become the whole story.
Related reading: September NFP shocks at 29K vs 90K expected and GBP/USD bounces as weak 29K NFP dents dollar.
What to watch next
- FOMC speakers: will anyone try to revive October hike pricing after the 29K print?
- Incoming inflation data: the hawks' last refuge — hot CPI/PCE could rebuild the tightening case.
- Fed funds futures: roughly 75bps of hikes were priced over twelve months pre-NFP; watch the unwind.
- GDPNow revisions: 3.7% tracking was the growth leg of the bull case.
MarketRadar take
The dollar's structural bid met its first real break in weeks. Growth near 4% and sticky inflation had made the tightening path look alive — the 29K print says the labor market disagrees. Near-term, fading dollar rallies makes more sense than buying dips, until data or the Fed rebuilds the hawkish case. No financial advice; the reaction to incoming inflation data is now the trade.
