In the week ahead: FOMC meeting minutes, U.S. Core CPI, Jobless Claims

The EUR/USD pair fell beneath the key level of 1.1000 on Friday, as the U.S. dollar strengthened on the back of upbeat Nonfarm Payrolls (NFP) data for September.

The September NFP report revealed that 254,000 jobs were added, significantly exceeding the 140,000 anticipated. Meanwhile, the U.S. unemployment rate dropped to 4.1%. However, following the NFP data, the probability of another 50 basis-point rate cut in November, as measured by the CME FedWatch tool, has dropped sharply—from 33% to just 10%.

Adding to inflationary concerns, wage growth has also outpaced expectations. Average Hourly Earnings increased by 4.0% year-on-year, higher than the estimated 3.8% and August's revised figure of 3.9%. On a monthly basis, wages rose by 0.4%, exceeding the 0.3% forecast, though this was slightly slower than the revised 0.5% growth in August.

Gold prices retreated following a stronger-than-expected U.S. jobs report, which suggested that the labor market remains resilient. This has led to speculation that the Federal Reserve will ease its policy in smaller, 25 basis-point (bps) increments moving forward.

In response to the jobs data, the yield on the U.S. 10-year Treasury note surged by 12 bps to 3.971%, a level last seen in mid-August 2024. This rise in yields, combined with a strengthening U.S. dollar, has contributed to capping gains in gold prices.

Looking ahead, this week's U.S. economic calendar will include key releases such as inflation data, jobless claims, and the University of Michigan Consumer Sentiment report, all of which could influence market sentiment.

Oil prices surged on Friday, marking their biggest weekly gains in over a year, as escalating tensions in the Middle East raised the threat of a region-wide conflict. However, the gains were tempered after U.S. President Joe Biden urged Israel to avoid targeting Iranian oil facilities.

Oil prices initially jumped nearly 2% during the session but pulled back after Biden publicly advised Israel to explore alternatives to striking Iranian oil fields. On Thursday, crude benchmarks had surged by over 5% following Biden's confirmation that the U.S. was in discussions with Israel about potential actions against Iran's energy infrastructure.

On Friday, Iran's Supreme Leader Ayatollah Ali Khamenei made a rare public appearance, urging continued resistance against Israel.

U.S. main indexes ended the session on Friday with gains, as a stronger-than-expected U.S. jobs report calmed concerns about a potential economic slowdown.

The report showed that U.S. job gains in September were the highest in six months, with the unemployment rate falling to 4.1%. This data reassured investors that economic activity remains robust, heading into the fourth quarter.

As a result, traders further scaled back expectations for a 50-basis-point rate cut at the Federal Reserve's November meeting.

Looking ahead, third-quarter earnings season for S&P 500 companies kicks off this week, with major financial firms such as JP Morgan Chase, Wells Fargo, and BlackRock set to report on October 11.