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The U.S. dollar declined against a basket of major currencies on Friday, retreating from a more than two-month peak after U.S. employment data for September disappointed analysts’ expectations, while the British pound plunged after what traders called a "flash crash" knocked the currency to a 31-year low.
The U.S. economy added 156,000 jobs last month, down from a gain of 167,000 in August, while the unemployment rate ticked up to 5.0%, the Labor Department said Friday. Market analysts had expected 176,000 new jobs and the jobless rate to hold at 4.9%.
Despite the lackluster report, the slowdown was not expected to prevent the Federal Reserve from raising interest rates later this year. Markets are currently pricing in around a 65% chance of a rate hike at December's meeting, According to Investing.com's Fed Rate Monitor Tool.
The U.S. dollar index, which measures the greenback's value against a basket of six major currencies, ended the week at 96.65, down 0.1% on the day. The index had climbed to a more than two-month high of 97.21 prior the release of the U.S. jobs report.
For the week, the greenback gained 1.3% amid growing expectations the Federal Reserve would raise interest rates by the end of the year.
Against the yen, the dollar sank nearly 1% to end at 102.91 by late trade Friday, off the previous session’s one-month peak of 104.16.
The euro, meanwhile, inched up almost 0.5% against the greenback to settle at 1.1201, off a two-month low of 1.1104 hit earlier.
Elsewhere, sterling suffered a dramatic fall of more than 6% in Asian trading on Friday. Analysts did not rule out the possibility of a “fat finger”, or human error, but most speculated that it could have caused by algorithms picking up on comments from French President François Hollande, who took a rough position on the Brexit, with the move exacerbated by thin trade.
After the initial crash, which took the pound to as low as 1.2035 against the dollar, the pair recovered somewhat, with GBP/USD closing down approximately 1.5% at 1.2436.
The currency has been under heavy selling pressure in recent days on fears of the impact of Britain's impending exit from the European Union.
In the week ahead, market players will be turning their attention to Wednesday’s minutes of the Federal Reserve’s September policy meeting for fresh clues on the timing of the next U.S. rate hike.
U.S. retail sales data will also be in the spotlight, as investors attempt to gauge if the world's largest economy is strong enough to withstand an increase in borrowing costs before the end of the year.
In addition, there are a handful of Fed speakers on tap, including Chair Janet Yellen, as traders look for more clues on the likelihood of a December rate hike.
Elsewhere, China is to release what will be closely watched trade and inflation data amid ongoing concerns over the health of the world's second biggest economy.
Ahead of the coming week, Investing.com has compiled a list of these and other significant events likely to affect the markets.
Monday, October 10
Financial markets in Japan, the U.S. and Canada will remain closed for public holidays.
Meanwhile, Chicago Fed President Charles Evans will speak on monetary policy and the economy at 10:00PM ET (2:00GMT on Tuesday).
Tuesday, October 11
Japan is to release data on the current account.
Australia is to release private sector data on business confidence.
In the euro zone, the ZEW Institute is to report on German economic sentiment.
In the U.S., Minneapolis Fed President Neel Kashkari is to deliver comments at 11:00AM ET (15:00GMT).
Wednesday, October 12
The U.S. is to produce data on job openings and labor turnover, while the Federal Reserve is to publish the minutes of its latest monetary policy meeting.
In addition, New York Fed President Bill Dudley speaks with the Business Council of New York State at 8:00AM ET (12:00GMT), while Kansas City Fed President Esther George speaks at the Federal Reserve Bank of Chicago Annual Payments Symposium at 9:40AM ET (13:40GMT).
Thursday, October 13
China is to publish a report on the trade balance.
The U.S. is to release the weekly report on initial jobless claims, import prices and crude oil stockpiles.
Friday, October 14
The Reserve Bank of Australia will publish its financial stability review, which is an assessment of conditions in the financial system and potential risks to financial stability.
China is to produce data on consumer and producer price inflation.
Switzerland is to publish data on producer prices.
The Bank of England will release its credit conditions survey, which includes detailed data on secured and unsecured lending to households, small businesses, non-financial corporations, and non-bank financial firms.
Later in the day, the U.S is to round up the week with a string of reports on retail sales, producer prices and a preliminary look at consumer sentiment.
Finally, Fed Chair Janet Yellen is scheduled to speak on "macroeconomic research after the crisis" at the Federal Reserve Bank of Boston’s Annual Research Conference at 1:30PM ET (17:30GMT).