Daily Financial Breakfast 7 November 2026: U.S. Payrolls Rise 165,000 While Fed's Daly Says Economy Gives Room to Fight Inflation

Market News Today: Key Takeaways

• U.S. payrolls increased by 165,000 in October against expectations of 65,000, while Canada lost 4,700 jobs and its unemployment rate rose to 6.7%.
• San Francisco Fed President Mary Daly said the solid economy and encouraging employment report give policymakers latitude to complete the inflation fight.
• St. Louis Fed President Alberto Musalem said people remain concerned about current inflation, although inflation expectations remain anchored.
• ABN AMRO said eurozone inflation reached 4% in October as overlapping energy, food and supply-chain shocks pushed prices higher.

Market Developments

Foreign Exchange

The U.S. Dollar Index rose 0.74% to around 102.35 on Friday following the employment release. EUR/USD fell 0.77% to around 1.1132, erasing its weekly gains, while GBP/USD declined nearly 0.60% to 1.3371 after reaching near 1.3463. USD/JPY rebounded to around 158.30 from an intraday low of 157.26, snapping a two-day losing streak. USD/CAD gained 0.78% to around 1.4120. AUD/USD fell to levels last seen in late March, with the decline also occurring against an AI-led stock-market selloff and cautious RBA guidance following its fifth interest-rate increase this year.

Gold

Gold retreated nearly 1% on Friday to $4,060 after reaching $4,106 earlier in the session, falling below $4,100 following the stronger-than-expected U.S. employment report.

Employment & Federal Reserve

U.S. Adds 165,000 Jobs as Canadian Employment Contracts

The U.S. Bureau of Labor Statistics reported that nonfarm payrolls increased by 165,000 in October, exceeding expectations of 65,000. The unemployment rate declined to 4.1% from 4.2% in September.

Upward revisions added another 84,000 jobs to the preceding two months. September's increase was revised to 60,000 from 29,000, while August's gain was raised to 186,000 from 133,000.

Canada's simultaneous employment release showed a contrasting picture. Statistics Canada reported that employment fell by 4,700 in October and the unemployment rate rose to 6.7%.

Following the releases, CME FedWatch showed markets pricing a nearly 80% probability of a 25-basis-point Federal Reserve rate increase in December, compared with around 70% the previous day.

Fed's Daly Says Solid Economy Gives Latitude to Complete Inflation Fight

San Francisco Federal Reserve President Mary Daly welcomed the employment report in a CNBC interview on Friday, describing it as good news and saying the economy remained solid. That strength “gives latitude to get inflation job done,” she said.

Fed's Musalem Says Inflation Concerns Persist but Expectations Remain Anchored

St. Louis Federal Reserve President Alberto Musalem said on Friday that “people remain concerned about inflation at the current level.” He added that inflation expectations remain anchored, distinguishing concerns about current prices from expectations about future inflation.

Eurozone Inflation

ABN AMRO Says Eurozone Inflation Reached 4% as Supply Shocks Overlap

Eurozone inflation reached 4% in October, ABN AMRO said, attributing the recent acceleration to overlapping energy, food and supply-bottleneck shocks that affect prices through different channels and at different speeds.

The bank expects inflation to remain elevated through 2027, with higher food inflation and goods pipeline pressures partly offsetting easing energy inflation. It identified wage demands and inflation expectations as central to whether the shocks produce persistent second-round effects.

ABN AMRO said looser labour-market conditions and high interest rates should keep inflation expectations anchored, limiting a repeat of the persistent inflation dynamics seen in 2022–23.