Dollar falls against yen, euro as weak US jobs data clouds Fed outlook

The dollar weakened against major currencies, including the yen and euro, on Friday after an unexpected decline in US employment in July fueled concerns about the economy and clouded the Federal Reserve’s interest-rate outlook, Reuters reported.

The US economy shed 23,000 jobs in July, compared with an increase of 80,000 forecast by economists polled by Reuters, Labour Department data showed. The unemployment rate declined to 4.1%, but the labour-force participation rate fell to 61.4%, its lowest level in nearly five-and-a-half years.

“The big drop that we saw this morning is almost wholly related to the US employment report for July because I think no one really expected non-farm payrolls to be negative or that there would be a big downward revision in the June numbers,” said Thierry Wizman, global FX and rates strategist at Macquarie Group, told Reuters in an interview.


The dollar fell 0.52% to 157.62 yen after the report, reversing some of its recent recovery from a 13-week low reached following last week’s historic joint intervention by Japanese and US authorities.

The dollar index, which tracks the US currency against a host of other international ones, fell 0.% to 99.61. The euro gained 0.31% against the dollar to $1.1559.

US Treasury yields also fell after the report. The two-year yield, which closely tracks Fed policy expectations, dropped 5.19 basis points to 4.193%, while the benchmark 10-year yield declined 2.67 basis points to 4.643%.

Traders now see a nearly 56% probability that the Fed will leave rates unchanged in September, up from 45% a day earlier, according to CME’s FedWatch tool.

Gold rallied as the dollar weakened, with spot prices climbing 2.28% to $4,336.09 an ounce.