Dollar slips to 7-week low as jobs gloom bolsters Fed cut wagers
The dollar wallowed close to a seven-week low on Tuesday as investors braced for U.S. data revisions that could point to a jobs market in worse shape than initially thought, shoring up the case for even deeper Federal Reserve interest rate cuts.
The dollar weakened 0.2% against the Japanese yen to 147.21, while sterling was up 0.1% at $1.3558. The euro slipped to $1.1752 after touching its strongest level since July 24.
Against a basket of peers, the dollar slipped to a low of 97.25, its lowest since late-July, ahead of the release of preliminary benchmark revisions, for jobs data covering the period from April 2024 to March 2025.
Economists anticipate a downward revision of as much as 800,000 jobs, which could signal that the Fed is behind the curve in efforts to achieve maximum employment.
Traders' expectations of more aggressive Fed easing are gradually increasing. Money markets have fully priced in a 25-basis point cut, and the odds of an outsized 50-basis point reduction have drifted higher to nearly 12% as well, per CME's FedWatch tool.
Advisers to the Trump administration are preparing a report laying out the alleged shortcomings of the Bureau of Labor Statistics, which they may publish in coming weeks, The Wall Street Journal, reported on Tuesday, citing unnamed sources.
Burgeoning expectations of policy easing by the Fed have also helped lift the spot gold price to a record high of $3,659.10 per ounce on Tuesday.
Among other currencies, the Norwegian crown advanced about 0.2% each against the dollar and the euro after Norway's minority Labour Party government won a second term in power on Monday.
Political developments across Tokyo to Buenos Aires are likely to stay in focus for investors after the resignation of Japanese Prime Minister Shigeru Ishiba, the ouster of French Prime Minister Francois Bayrou and the abrupt removal of Indonesia's finance chief, all over the past few days.
Later this week, the European Central Bank is widely expected to keep rates unchanged at its policy meeting on Thursday.
Economists were split last month on the likelihood of further rate reductions by the ECB, but sentiment has shifted with recent data showing inflation holding close to the 2% target and unemployment at a record low.
Meanwhile, the Indonesian rupiah weakened 0.8% after the government replaced its finance minister on Monday. Bank Indonesia was seen buying longer-dated government bonds on Tuesday in an attempt to stabilise the market, according to two traders.
Source : Reuters
