Dollar tumbles, traders bet on more US rate cuts after weak jobs report
The dollar dropped on Friday and was on track for its biggest daily loss against the euro and yen since April after data showed that U.S. employers added fewer jobs in July than economists had expected, while last month’s jobs gains were revised sharply lower, leading traders to ramp up bets on how many times the Federal Reserve is likely to cut rates this year.
Employers added 73,000 jobs last month, below the 110,000 expected by economists polled by Reuters, while the unemployment rate edged higher to 4.2%, as anticipated, up from 4.1% in June. Job gains for June were revised down to 14,000, from the previously reported 147,000.
The dollar index , which measures the greenback against a basket of currencies including the yen and the euro, was last down 1.06% on the day at 98.97.
The euro rose 1.16% to $1.1547. The single currency reached $1.1389 earlier on Friday, the lowest since June 10.
Against the Japanese yen , the dollar weakened 2.01% to 147.7. The greenback earlier reached 150.91, the highest since March 28.
The Fed has indicated it is in no rush to cut rates due to concern that President Donald Trump’s tariff policies will reignite inflation over the coming months.
Fed funds futures traders pared bets on how many times the U.S. central bank is likely to cut rates this year after Fed Chair Jerome Powell on Wednesday offered a hawkish outlook for monetary policy and declined to indicate that a cut in September was likely.
But they ramped up bets on cuts again on Friday after the jobs data. Traders are now pricing in 58 basis points of cuts by year-end, up from around 34 basis points on Thursday, with the first cut seen in September.
Whether the Fed cuts in September will now likely depend on the next jobs report for August.
The August jobs data will be released on September 5, with the Fed due to meet on September 16-17.
A more dovish Fed would likely be negative for the U.S. currency, even after it has appeared to find its footing in recent weeks following a rough first half of the year.
The dollar had gained earlier on Friday after Trump imposed new tariff rates on dozens of trade partners.
The Swiss franc was among the hardest hit as Switzerland now faces a 39% rate.
The Swissie fell against a range of currencies in response to Trump's hefty duties and to his demand that pharma companies - key Swiss exporters - lower the prices at which they sell to U.S. consumers.
The dollar was last down 0.76% against the Swiss franc at 0.806 , after earlier reaching 0.8171, the highest since June 23.
Source : Reuters
