U.S. dollar drops as weak jobs data for July lowered interest rate cut expectations
(MENAFN) The U.S. dollar saw a notable decline following a disappointing employment report for July, which has increased speculation that the Federal Reserve might implement a substantial interest rate cut in September to counteract potential economic challenges. The latest employment figures reveal that U.S. employers added only 114,000 jobs last month, significantly lower than the anticipated 175,000. Moreover, the unemployment rate rose to 4.3 percent, exceeding the forecasted 4.1 percent and suggesting a deterioration in the labor market.
In response to these underwhelming employment statistics, the dollar index fell by 0.85 percent to 103.47, reaching its lowest level since March 21. At the same time, the euro gained strength, appreciating by 0.9 percent to USD1.0888. Additionally, the dollar dropped by 1.23 percent against the yen, reaching 147.53 yen, and earlier fell to 147.02 yen, the weakest level since March 12. These currency movements indicate market expectations that the Federal Reserve may consider a 50 basis point rate cut to address the economic slowdown.
The weakened labor market data has intensified speculation about a potential rate cut, reflecting concerns about slowing economic conditions and their impact on financial markets. As traders and analysts adjust their forecasts, the dollar’s decline is seen as a direct consequence of the anticipated monetary policy adjustments by the Federal Reserve in response to the economic indicators.
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