Update from North America

Dollar Softens Ahead of NFPs

2 min read

The U.S. Dollar has pulled back from its four-day winning streak ahead of the release of Non-Farm Payrolls for the month of September at 8:30am.

The Dollar has still gained more than three quarters of a percent this week despite this morning’s drop. Economists are estimating that NFPs rose by 90k jobs in September, a more modest increase than the 162k addition seen in August, which was itself the largest increase seen since March. The Unemployment Rate is expected to remain stable at 4.1%. Oil prices have also fallen, with Brent Crude under $100 per barrel, and WTI under $90. The U.S. 10-year yield is relatively unchanged at approximately 5.2%.

What to Watch This Week…

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EUR

The Euro is down against the Dollar this morning, slipping to its weakest level since May 2025 amidst concern regarding the French fiscal situation. The French 2027 budget proposal released yesterday morning was considered optimistic but overall failed to impress and exacerbated concerns that Europe’s second largest economy would be able to rein in debt ahead of elections slated for next year. The France-Germany 10-year yield spread has reached its widest level since November 2011, when the sovereign debt crisis forced the European Central Bank to intervene. There is concern amongst Traders that the French bond sell-off will spread to Italy and Spain. It is currently unclear whether the ECB will intervene or make use of the Transmission Protection Instrument to buy bonds.

CHF

The Swiss Franc is the G10s best performer as Traders look to flee French fiscal risk and rotate into safe-haven assets. This has put the Franc on track for its best weekly performance against the Euro since April 2025. The move in EUR/CHF is reminiscent of when Swissie was used as a macro hedge against Eurozone weakness during the 2011/2012 sovereign debt crisis. It is worth noting that the Swiss National Bank has a historical tendency to intervene when the Franc appreciates too quickly, and as such their tolerance for further appreciation will be closely watched.