Dollar rises as U.S. jobs data changes, expectations of Fed rate cuts
(MENAFN) On Friday, the dollar experienced significant volatility but ultimately rose after U.S. jobs data showed a slower-than-expected increase in employment for August, indicating a steady, albeit modest, slowdown in the labor market. According to the Labor Department's Bureau of Labor Statistics, nonfarm payrolls grew by 142,000 in August, following a downward revision of July's figures to 89,000. Economists had projected an increase of 160,000 jobs, with the previous estimate for July set at 114,000. Despite an initial drop against most major currencies following the release of the jobs data, the dollar quickly recovered and traded higher.
The euro fell 0.3 percent against the dollar to USD1.1078, having briefly risen to USD1.1155 immediately after the report. The dollar index, which gauges the U.S. currency’s performance against a basket of six major currencies, increased by 0.3 percent to 101.32. Expectations surrounding the Federal Reserve's next move were also influenced, with traders now forecasting a 39 percent chance that the Fed will lower rates from the current 5.25-5.50 percent range to 4.75-5 percent at its meeting on September 17-18. Prior to the report, the likelihood of a 25 basis point cut was seen at 43 percent. The dollar rose 0.2 percent against the Japanese yen to 143.75, aiming to end a three-session losing streak.
In related news, New York Federal Reserve President John Williams indicated that improving economic conditions might pave the way for lower interest rates, with decisions to be guided by ongoing economic performance. Federal Reserve Chairman Jerome Powell has suggested a shift in focus from combating inflation to avoiding further deterioration in the labor market, advocating for an immediate start to monetary easing at last month’s Jackson Hole economic conference. Meanwhile, the British pound remained relatively stable at USD1.31825, and Bitcoin saw a rise of about 1 percent, reaching USD56,720.
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