Key facts
- The US dollar fell sharply against major currencies after a weaker-than-expected jobs report for July.
- US non-farm payrolls increased by only 73,000 in July, significantly below the expected 110,000.
- The unemployment rate rose to 4.2% in July, up from 4.1% in June.
- The dollar index saw its largest one-day drop since January 2023, falling 1.23%.
- The euro and Japanese yen rallied significantly against the dollar following the jobs data.
The US dollar experienced a significant decline against major currencies on Friday, following the release of surprisingly weak employment data for July. The US economy added only 73,000 jobs, falling short of economists' expectations of 110,000, and the prior month's job gains were sharply revised downwards. The unemployment rate edged up to 4.2% from 4.1% in June, further signaling a potential slowdown in economic strength.
This disappointing labor market report triggered a broad-based selloff in the dollar, as traders rapidly reassessed the Federal Reserve's monetary policy outlook. Market speculation intensified that the Fed might pivot towards interest rate cuts sooner than anticipated, potentially as early as September, despite previous hawkish signals from Fed Chair Jerome Powell.
The dollar index, which measures the greenback's performance against a basket of major currencies, plunged 1.23% to its lowest level since mid-June. The euro saw a substantial gain, surging 1.37% to $1.1571, marking its largest one-day increase since April. The Japanese yen also rallied sharply, with the dollar falling 2.23% against the yen to 147.37, its steepest daily decline since January 2023.