US Dollar Weakens on Weak Labor Data
The US dollar index fell to 98 on Friday from a two-month high of 99 earlier in the session as signs of a weak labor market strengthened the case for multiple Fed interest rate cuts this year and raised the prospect of lower trade flows.
Non-farm payrolls rose by 73,000 in July, well below expectations, and the figure for the previous two months was revised down by 258,000, dispelling earlier views that the US labor market was resilient to the threat of tariffs and restrictive interest rates.
Markets are piling on bets for multiple rate cuts this year as some FOMC members have advocated for lower borrowing costs. Meanwhile, the President's administration began imposing its first wave of reciprocal tariffs in early August, with levies imposed on the European Union, Japan, and Korea, while aggressive tariff increases are set to hit Brazil, Switzerland, and India next week. The US dollar weakened against the euro after the bloc's inflation unexpectedly rose, supporting the ECB's hawkish outlook.
Source: Trading Economics
