The FXIFY Trading Desk Brief: Week of 12 October 2026

Situation Report

Two weeks after a unanimous Fed hike, the data has turned against October. September NFP came in at just 29,000, well below the 84,000 consensus and the weakest print since the cycle began. The unemployment rate ticked up to 4.2%. Revisions subtracted another 60,000 jobs from July and August combined. October hike probability collapsed from approximately 70% before the report to 17-22% in the hours after, and has since stabilised near 21% per CME FedWatch as of today.

The FOMC minutes from the September 15-16 meeting, released Wednesday 7 October, told the other side of that story. All 19 policymakers backed the September hike unanimously. Most members indicated another hike could be required before year-end. The minutes flagged that the committee is watching underlying inflation closely, specifically core services outside housing, core goods, the effect of the BEA methodology revision on PCE, short-term inflation expectations, and how long energy prices stay elevated. December hike probability sits at 78.3% per CME FedWatch as of Thursday, suggesting the market has not abandoned the hiking cycle, only pushed it one meeting further.

This week resolves that tension. September CPI lands Wednesday 14 October. September PPI and Retail Sales land Thursday 15 October. Together they are the last major inflation and spending data points before the October 28 FOMC vote. Whatever direction they point, the committee will have them in hand when it sits down to decide.

Last Week in Review

September NFP: 29,000, the weakest print of the cycle

The Bureau of Labor Statistics reported on Friday 2 October that nonfarm payrolls rose just 29,000 in September, far below the 84,000 consensus and the weakest monthly gain since the current tightening cycle began. The unemployment rate rose to 4.2% from 4.1%, though the increase was marginal at only 0.03 percentage points, enough to round up. Labour force participation rose to 61.8%, meaning the unemployment rate moved partly because more people entered the workforce rather than because more workers lost jobs.

Healthcare led job gains with 17,000, construction added 11,000, and manufacturing added 9,000. Government shed 17,000, extending a cumulative 216,000 decline over the past year driven by the ongoing reduction in the federal workforce. Prior months were revised down a combined 60,000. August, which had initially printed at 162,000, was revised down to 133,000. The 12-month average monthly gain through September now stands at 45,000.

The market reaction was immediate. October hike probability fell from approximately 70% to 17-22%. The 10-year Treasury yield retreated. Gold surged. On prediction market platform Kalshi, October hike odds fell to 18%. December hike probability on FedWatch moved above 75%, indicating the market had shifted the timeline rather than abandoned the hiking cycle.

FOMC minutes: unanimous hawkish backing, December in focus

The minutes from the September 15-16 meeting released Wednesday 7 October showed all 19 policymakers supported the rate increase. Most members indicated another hike before year-end was likely. The committee discussed the BEA methodology revision to August PCE explicitly, noting uncertainty about the extent to which it reflected genuine disinflation versus a statistical reclassification. Members flagged that they needed more data to determine whether the lower PCE reading represented a sustained trend.

The minutes also confirmed that the committee assessed the labour market as near full employment at the time of the September meeting. The September NFP print arrived after those discussions. StockTitan and AdmiralMarkets noted that the minutes are now technically stale relative to the incoming data, but that a hawkish account of the September debate could push October odds back toward 30-40% if the CPI reading this week surprises to the upside.

This Week’s Events

Wednesday, 14 October — US Consumer Price Index September (USD) | 12:30 PM GMT

The Bureau of Labor Statistics releases September CPI at 8:30 AM ET. This is the primary event of the week and the last major inflation data point the FOMC sees before voting on October 28.

August CPI came in at 3.4% year-on-year and 0.4% month-on-month headline, with core at 0.3% month-on-month and 2.4% year-on-year. For September, the Cleveland Fed nowcast as of 7 October projects headline at 3.60% year-on-year and core at 2.39% year-on-year. The consensus is for core CPI to hold near 2.4% year-on-year.

Two directional inputs are relevant. First, gasoline prices fell approximately 9.3% in September per EIA retail data, following partial stabilisation of the Iran conflict. That should pull headline lower month-on-month from August’s 0.4%. Second, shelter costs, which drove much of August’s core acceleration, are expected to moderate based on leading rent indicators. If both energy and shelter ease, September core CPI at or below 0.2% month-on-month would validate the disinflation story from August’s PCE and make an October hold the clear base case.

If core holds at 0.3% or above despite the energy tailwind, it signals services inflation remains sticky and the PCE methodology revision obscured genuine persistence. October hike probability, currently near 21%, would recover sharply.

The key number: Core CPI month-on-month. 0.2% or below leans dovish. 0.3% or above leans hawkish.

What traders are watching:

Higher than expected: Core at 0.3%+ signals sticky inflation. October hike probability recovers toward 40-50%. Dollar strengthens.

In line or lower: Core at 0.2% or below confirms disinflation. October hold becomes near-certain. Dollar weakens and risk assets extend recent gains.

Thursday, 15 October — US Producer Price Index September (USD) | 12:30 PM GMT

The BLS releases September PPI at 8:30 AM ET. The headline monthly reading is forecast at 0.1% month-on-month per LiteFinance and the Madres Travels weekly calendar. August PPI came in at 0.4% month-on-month, with Prices Paid in the ISM Manufacturing survey surging to 77.9 in September, the highest since the Iran conflict began. If that upstream cost pressure flows into the September PPI, it would provide a forward inflation signal that contradicts the expected CPI relief from falling energy prices.

What traders are watching:

Higher than expected: Confirms the ISM Prices Paid surge is feeding into producer costs. Adds to the case that pipeline inflation remains elevated heading into Q4.

In line or lower: Consistent with the energy price pullback. Reduces the forward inflation concern for now.

Thursday, 15 October — US Retail Sales September (USD) | 12:30 PM GMT

The Census Bureau releases September Retail Sales at 8:30 AM ET alongside PPI. This report measures total consumer spending in stores and online for September.

August Retail Sales rose 1.2%, the strongest monthly increase since March. September brings a complicated backdrop. With September NFP printing at just 29,000 and the unemployment rate ticking up to 4.2%, the question is whether the labour market weakness in September has begun to weigh on household spending. Coresight Research has noted that back-to-school promotional activity was active in August, which may have pulled some September demand forward.

The control group, which feeds directly into GDP calculations, will be closely watched. A meaningful miss in the control group following the weak NFP print would raise the first serious concern about Q3 GDP tracking.

What traders are watching:

Strong: Consumer spending holding despite labour market softness. Reduces recession concern.

Weak: Confirms that employment weakness is beginning to weigh on spending. Adds to the October hold case and raises Q4 growth concern.

The Call

This week decides October 28. The committee will have Wednesday’s CPI and Thursday’s PPI in hand before voting. Those are the only two major inflation readings it gets before the meeting.

The current setup is asymmetric. October hike probability is 21%. December is at 78.3%. For October to come back to life this week, CPI needs to print hot enough to reverse the NFP narrative in a single data point. For December to remain the base case, CPI just needs to come in anywhere near consensus.

The minutes gave the market a clear signal: the committee has not abandoned the hiking cycle. What it has done is condition the next move on the data. This week is the data.

Three things to watch beyond the calendar.

First, Fed speakers. Governor Michelle Bowman and Governor Lisa Cook speak Monday 6 October. Bowman has been one of the more hawkish voices on the committee. Any signal from her that the NFP miss has not changed her rate view would push back against the October probability collapse.

Second, the 10-year Treasury yield. It fell significantly after the NFP miss and has since stabilised near 4.75-4.85%. If it moves back above 5.0% ahead of Wednesday’s CPI, the rates market is independently signalling hawkish expectations before the data confirms them.

Third, gold. It surged after the NFP miss as October hike odds collapsed. A hot CPI on Wednesday that pushes October probability back above 35% would likely reverse some of that move. A soft CPI that cements the December timeline would likely support gold further.

The October 28 meeting is 19 days away. After Thursday’s PPI, traders will have all the inflation data they are going to get before the vote.

Calendar

Date	Event	CCY	Time GMT	Impact
Wed 14 Oct	Consumer Price Index (Sep)	USD	12:30 PM	CRITICAL
Thu 15 Oct	Producer Price Index (Sep)	USD	12:30 PM	HIGH
Thu 15 Oct	Retail Sales (Sep)	USD	12:30 PM	HIGH

Upcoming releases:

• Tue 28 Oct: FOMC rate decision (2:00 PM ET)
• Wed 29 Oct: Q3 GDP advance estimate (8:30 AM ET)
• Wed 29 Oct: September Core PCE (8:30 AM ET)

Risk Notice

Make sure you understand how your FXIFY account drawdown rules work before trading around this week’s releases. Wednesday’s CPI and Thursday’s back-to-back PPI and Retail Sales both carry elevated volatility potential given the current uncertainty around October FOMC pricing. For more on managing volatility as a funded trader, see our guides on trading styles for funded traders and how news events affect prop traders.