Strong U.S. job growth locks in higher-for-longer rates, widening the dollar’s lead over struggling peers

U.S. non-farm payrolls added 250,000 jobs in September 2025, exceeding expectations. The stronger-than-expected job growth reinforces expectations of further interest rate hikes by the Federal Reserve. Higher expected U.S. interest rates increase the yield advantage of dollar-denominated assets. Investors shift toward the U.S. dollar as a safe-haven and yield-attractive currency. Demand for the euro weakens as the ECB faces high inflation without clear policy direction, pushing EUR/USD to 1.0850. The British pound gains to 1.2500 on better retail sales and UK GDP growth of 0.3% in August, but fails to close the yield gap with the dollar. The Australian dollar falls to 0.6450 after losing 10,000 jobs and as the RBA adopts a dovish stance. USD/JPY rises to 143.50 as rising U.S. Treasury yields draw capital away from yen-denominated assets. Crude oil prices rebound due to OPEC+ production cuts, supporting the Canadian dollar at USD/CAD 1.3500. The U.S. dollar strengthens broadly as divergent monetary policies and risk-off sentiment amplify its appeal.