In New York currency trading on Friday, the dollar recorded its largest single-day drop in a month after a report showed U.S. job growth for September fell short of forecasts, briefly shaking traders' bets on whether the Federal Reserve would raise rates again this year.

The Bloomberg Dollar Spot Index fell 0.3% after government data showed nonfarm payrolls rose by 29,000 last month, compared with a median estimate of 90,000 in a Bloomberg survey of economists. The unemployment rate edged up to 4.2% from 4.1%.

After the data, traders briefly reduced their bets on a Fed hike and no longer fully expected another increase before year-end. By the end of the trading session, however, the market had once again priced in one more hike this year, though the dollar still held its losses.

The dollar had risen earlier in the week as a U.S.-Iran standoff kept oil prices elevated and mounting concerns over France's fiscal and political risks boosted demand for the greenback as a safe-haven asset.

On Friday, nearly all G10 currencies gained against the dollar. Wells Fargo strategist Erik Nelson said: "It's a mixed report, enough to dampen market pricing for the Fed outlook but not bad enough to undermine expectations for U.S. economic growth. The weaker dollar reaction should fade, and market attention will shift back to Europe's risk premium."

This week, the French government unveiled a plan to narrow its budget deficit by restraining spending and increasing tax revenue, deepening investor concerns about the country's debt. The euro rose 0.1% on Friday but still fell more than 1% against the dollar for the week.

Societe Generale chief currency strategist Kit Juckes said the unresolved Middle East situation, which has driven energy prices higher, "is clearly negative for the euro and positive for the dollar in the near term."

The dollar still gained about 0.8% this week, its third straight weekly advance and the longest streak since January 2025. Data from the U.S. Commodity Futures Trading Commission showed speculative traders increased bullish dollar positions for a second consecutive week in the week ended Sept. 29.