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Dollar softens after weak July payrolls, traders eye CPI
Nonfarm payrolls fell by 23,000 in July and the unemployment rate held at 4.1%, shifting attention to this week’s CPI data.
The U.S. dollar started the week on a weaker footing after Friday’s employment report showed nonfarm payrolls decreased by 23,000 in July. The unemployment rate was unchanged at 4.1%, and prior months were revised down by a combined 103,000 jobs for May and June, a sign that employment momentum is slowing, according to Yahoo Finance.
Yahoo Finance also noted that average hourly earnings rose 3.2% year over year, but other labor details pointed to cooling conditions, including a decline in the labor force participation rate to 61.4%. With the report seen as reinforcing weaker economic momentum, investors are recalibrating expectations for the Fed.
Traders are now looking toward this week’s July CPI release to gauge whether rate expectations should shift again. Analysts expect core inflation to rise 0.2% month over month and 2.5% year over year, and a softer reading could reduce pressure for further Fed action, while energy related inflation risks could complicate the outlook.
On the rates backdrop outside the United States, the ECB held its deposit rate at 2.25% in July, and the Bank of England kept its rate at 3.75% on July 30, with both policymakers highlighting ongoing energy driven inflation concerns. Yahoo Finance said the U.S. Dollar Index was quoted around 99.63, defending support near 99.42 even as the index remains under the 50 day and 100 day moving averages.
Latest closeDollar index 99.81 ▲0.2%