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Uncle Sam is on a roll! The September employment report showed impressive results and gave the Greenback another strong boost. Are traders starting to price in an early rate hike from the Fed?

The latest NFP report showed a 248,000 increase in employment for September, higher than the estimated 216,000 gain and enough to bring the jobless rate down from 6.1% to 5.9% – its lowest level since July 2008. To top it off, the August NFP reading was upgraded from 142,000 to 181,000, contributing to a total of 69,000 in upward revisions to previous employment data. No wonder the dollar bulls were partying hard last Friday!

strong nfp us dollarA closer look at the components of the September release indicates that the business services, construction, and health care sectors marked strong hiring gains. The labor force participation rate, an employment indicator that Fed Chairperson Yellen has been watching closely, ticked lower from 62.8% to 62.7% in September. This shows that some Americans still left the labor force and gave up looking for full-time work during the month.

Less upbeat parts of the jobs report include wage growth, as average hourly earnings stayed flat instead of posting the estimated 0.2% gain. This is another labor market component that Fed policymakers are keeping tabs on, as this reflects whether or not economic slack is being absorbed fast enough.

The underemployment rate, which also accounts for workers settling for part-time jobs, is still significantly high at 11.8%. Apart from that, breaking down the September hiring gains by age group reveals that most of the additional jobs created were concentrated on the 55-69 age group (That’s where my ol’ buddy Pip Diddy belongs!) instead of the prime 24-54 age group. What’s that all about?!

All in all, while the headline numbers were enough to blow most forex market participants’ socks off, the September jobs figures leave much to be desired. Fed policymakers are likely to focus on the lack of wage growth and the fact that underemployment is still a major concern, which might be dash hopes of an early rate hike. In other words, the latest NFP release might not be enough for Yellen to ditch her very cautious mindset.

While the U.S. economy has a long way to go before achieving its employment goals, it remains at the head of the pack in comparison to the rest of the major economies. With that, the Greenback could continue to outpace its forex rivals as Fed policy diverges from most of the central banks, particularly those that are open to further easing.

Do you think the Greenback could keep rallying until the end of the year? Share your thoughts in our comment box or cast your votes in our poll below!