U.S. Dollar Declines After Poor Job Data

By Chibuike Oguh

NEW YORK (Reuters) – The U.S. dollar fell sharply against major peers on Friday after crucial monthly jobs data showed that American employers hired fewer workers than expected, affirming weakening labor market conditions and likely guaranteeing a Federal Reserve interest rate cut.

Labor Department data revealed that nonfarm payrolls increased by only 22,000 jobs last month, far below the 75,000 positions estimated by economists polled by Reuters.

The dollar depreciated across the board following the report, weakening 0.70% to 147.44 against the Japanese yen, while remaining on track for the second consecutive week of gains. It dropped 0.91% to 0.79830 against the Swiss franc, poised for a fourth consecutive week of losses against that currency.

Juan Perez, director of trading at Monex USA in Washington, commented, “The data is giving evidence of what was feared… These costs can only be absorbed for so long, and what is being manifested is that companies are struggling with hiring.”

The euro appreciated 0.55% to $1.171675, indicating a weekly gain against the dollar. The dollar index fell 0.48% to 97.767 and is set to shed 0.23% for the week.

Perez further stated, “It’s definitely not a good story for the U.S. dollar, and it’s not a good story for the United States because what today truly establishes is that we are experiencing very serious stagflation.”

U.S. Treasury yields fell, with the rate-sensitive two-year note yield declining 8.1 basis points to 3.511%, and the benchmark U.S. 10-year notes down 8.8 basis points to 4.088%.

Wall Street’s main indexes, including the S&P 500, Nasdaq, and the Dow, reversed early gains and traded down.

Traders are now pricing in a 10% chance of a 50-basis point cut at the Fed’s next meeting later this month, while the probability of a 25-basis point cut stands at nearly 90%, according to the CME’s FedWatch tool.

Marc Chandler, chief market strategist at Bannockburn Global Forex, remarked, “The pendulum has swung very far in favor of a Fed rate cut… The prudent thing to do, and I think the Fed is prudent, is a 25-basis-point cut.”

The pound rose against a weaker dollar after Friday’s news that British Deputy Prime Minister Angela Rayner resigned for underpaying property tax on a new home, which poses a fresh blow for her boss, Prime Minister Keir Starmer. The pound strengthened 0.51% to $1.35055 and is on track for a 0.02% gain for the week.

Gold reached a fresh record high of $3,599.89 as the dollar weakened, with spot gold rising 1.35% to $3,593.04 an ounce.