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Dollar Index slips after weaker US jobs report cools Fed hike odds

The DXY fell to 99.58, while Treasury yields dropped, with money markets swinging to a roughly 70% chance of a September rate hold after the payrolls data.

Reported · Written up by our desk · Major Pairs

The US Dollar Index, or DXY, fell 0.36% to 99.58 following a weaker-than-expected US jobs report, according to FXStreet. After the release, the index briefly reached 99.41, its lowest level since June 15.

FXStreet said the softer labor market eased pressure on the Federal Reserve to raise rates further, even as inflation remains above the Fed’s 2% goal. The July Nonfarm Payrolls report showed 23,000 fewer jobs than in the workforce versus forecasts for an 80,000 jobs gain, with May and June revisions also moving lower.

The report was negative for payroll growth, but the unemployment rate ticked down to 4.1% from 4.2%. Following the data, US Treasury yields declined, with the 10-year T-note yield down 3.5 basis points to 4.637%.

Money markets trimmed September hike expectations, with the odds of a hold rising from about 42% to nearly 70%, FXStreet reported, while the probability of a 25 basis point increase eased from 58% to 30%. Traders are now focused on upcoming CPI data for July, with economists projecting declines in both headline and core inflation before PPI and the Fed’s preferred core PCE measure.

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Latest closeDollar index 99.98 ▲0.3%

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