Daily Financial Breakfast 7 November 2026: Why Does Fed's Daly See Economic Scope to Fight Inflation as U.S. Payrolls Grow by 165,000?

Market News Today: What Are the Main Market Signals?

• A positive U.S. payroll surprise contrasted with weaker Canadian employment: October brought 165,000 additional U.S. jobs against expectations of 65,000, while Canada shed 4,700 jobs and unemployment climbed to 6.7%.
• Room to complete the inflation fight comes from a resilient economy and an encouraging jobs report, San Francisco Fed President Mary Daly said.
• Concern over current inflation has not unsettled inflation expectations, which remain anchored, according to St. Louis Fed President Alberto Musalem.
• Overlapping shocks across energy, food and supply chains drove eurozone inflation up to 4% in October, according to ABN AMRO.

How Did Markets Respond?

How Did the Jobs Release Affect Foreign Exchange?

Friday's employment figures were followed by a 0.74% advance in the U.S. Dollar Index to around 102.35. The move left EUR/USD down 0.77% at around 1.1132, reversing its gains for the week. Having reached near 1.3463, GBP/USD subsequently lost nearly 0.60% to trade at 1.3371. A recovery from the intraday low of 157.26 took USD/JPY to around 158.30 and ended its two-day run of losses, while a 0.78% rise lifted USD/CAD to around 1.4120. Levels last recorded in late March were revisited by AUD/USD as it fell. The decline also coincided with an AI-led equity sell-off and cautious guidance from the RBA after its fifth interest-rate increase this year.

Why Did Gold Fall Below $4,100?

The stronger-than-expected U.S. employment figures pushed gold beneath $4,100 on Friday. From an earlier session level of $4,106, the metal retreated nearly 1% to $4,060.

Jobs Data & Federal Reserve Policy

What Does the 165,000 U.S. Jobs Gain Show Alongside Canada's Decline?

Expectations of a 65,000 rise in October nonfarm payrolls were surpassed by an increase of 165,000, the U.S. Bureau of Labor Statistics reported. At 4.1%, unemployment was lower than September's 4.2%.

The preceding two months also recorded upward revisions totalling another 84,000 jobs. September's increase, initially 29,000, was revised to 60,000; August's gain was lifted from 133,000 to 186,000.

A different employment trend emerged from Canada's figures, released simultaneously. October employment contracted by 4,700 and unemployment increased to 6.7%, according to Statistics Canada.

Markets subsequently assigned a nearly 80% probability to a 25-basis-point Federal Reserve rate increase in December, CME FedWatch showed. Before the releases, the previous day's probability had stood at around 70%.

Why Does Daly See Room to Complete the Inflation Fight?

Speaking to CNBC on Friday, San Francisco Federal Reserve President Mary Daly described the employment figures as good news and welcomed the report. With the economy still solid, she said its strength “gives latitude to get inflation job done,”

How Does Musalem Distinguish Inflation Concerns From Expectations?

Concerns about today's prices are distinct from expectations for future inflation, St. Louis Federal Reserve President Alberto Musalem indicated on Friday. While noting that “people remain concerned about inflation at the current level.” he added that inflation expectations remain anchored.

What Is Driving Eurozone Inflation?

Why Did Eurozone Inflation Reach 4%? ABN AMRO Points to Overlapping Shocks

Energy, food and supply-bottleneck shocks have overlapped to accelerate eurozone inflation, which reached 4% in October, according to ABN AMRO. These shocks transmit to prices through different channels and at varying speeds, the bank said.

Through 2027, inflation is expected to stay elevated, the bank said, as rising food inflation and pressures in the goods pipeline partly counter easing energy inflation. Whether lasting second-round effects emerge from these shocks hinges centrally on wage demands and inflation expectations, in its assessment.

A repeat of the persistent inflation dynamics of 2022–23 should be limited by looser labour-market conditions and high interest rates, ABN AMRO said, as these should help keep inflation expectations anchored.