THE US dollar index stayed slightly lower on Friday (Jul 5) after data showed US job growth slowed marginally in June while the unemployment rate rose, underscoring the view the Federal Reserve could begin cutting interest rates in September.
Nonfarm US payrolls increased by 206,000 jobs last month, the Labor Department report showed. Data for May was revised sharply down to show 218,000 jobs added instead of the previously reported 272,000. The unemployment rate rose to 4.1 per cent, slightly higher than the estimated 4.0 per cent.
Investors have been watching the labour market and inflation data closely as they try to gauge when the Fed could begin cutting rates from nearly two-decade highs.
The dollar index initially extended declines after the data. The dollar weakened against the yen before paring losses.
The dollar index, which measures the greenback against a basket of currencies, was last down 0.3 per cent at 104.87 and hit a three-week low early.
Against the Japanese yen, the dollar weakened 0.3 per cent to 160.73. It was near 160.45 just after the US payrolls data.
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“We see rates coming down across the curve on confirmation of a moderation in US labour markets. The unexpected rise in the unemployment rate, the deceleration in wage gains and revisions in prior months’ headline gains all point to a slowing in labour market conditions,” said Karl Schamotta, chief market strategist at Corpay in Toronto.
“This is… raising the likelihood that we do see (Fed) Chair Powell put a September rate cut on the table either at the July policy meeting or at the Jackson Hole conference in August.”
Futures markets are now pricing in a roughly 72 per cent chance for a 25 basis point rate cut at the Fed’s meeting in September, up from a 57.9 per cent chance seen a week ago, according to CME’s FedWatch Tool.
The euro was last up 0.2 per cent at US$1.0835 and on track for its biggest weekly gain of the year against the dollar.
The euro has been bolstered by signs France could be heading for a hung parliament in elections on Sunday rather than a ruling majority for the far-right National Rally.
Marine Le Pen’s eurosceptic, anti-immigration National Rally (RN) topped the parliamentary election’s first round with a third of the vote, opening the prospect of the far right leading a French government for the first time since World War Two.
The pound firmed as the Labour party secured a landslide victory in the UK general election.
Sterling strengthened 0.5 per cent to US$1.2814.
Bitcoin was set for its biggest weekly fall in nearly a year as traders worried about the likely dumping of tokens from defunct Japanese exchange Mt. Gox and further selling by leveraged players after the cryptocurrency’s strong run.
The price of the world’s largest cryptocurrency slid as much as 8 per cent on the day to US$53,523, its lowest level since late February. It was on track for its biggest weekly decline since August 2023.
Bitcoin was last down 3.08 per cent at US$56,530.00. Ethereum declined 4.81 per cent at US$2991.8. REUTERS
