The U.S. dollar experienced a significant decline on Friday because weak employment data led investors to anticipate multiple Federal Reserve interest rate reductions throughout the year. The July employment data showed employers added only 73,000 jobs which exceeded expectations by 100,000 and June’s employment numbers were reduced to 14,000 from 147,000. The unemployment rate increased to 4.2%.
Helen Given from Money USA described the results as worse than market expectations because they included both the disappointing July employment data and the large downward revision of June’s numbers.
The dollar index dropped 1.09% to 98.94 and the euro rose 1.22% to $1.1554. The greenback experienced a 1.58% decline against the yen which resulted in a value of 148.35.
The market participants who had reduced their expectations for near-term rate cuts after Fed Chair Jerome Powell delivered his hawkish statements now changed their minds. The current market expectations indicate a total of 54 basis points of interest rate cuts for this year with September emerging as the primary time for these reductions. The labor market indicators show a clear decline which may lead the Fed to change its monetary policy.
August’s employment data now carries significant importance according to Given.
