Payrolls grew less than expected in August and expectations are growing for gradual interest rate cuts by the Fed.
The global dollar rose on Friday in volatile trading after data showed the employment in USA grew less than expected in August, but indicated only a steady slowdown in the labor market, probably supporting gradual interest rate cuts by the Federal Reserve (Fed).
At a time when investors are awaiting the Fed’s decision, the dollar index —which measures the performance of the greenback against a basket of six other internationally significant currencies— rose 0.2% to 101.21, while the euro fell 0.3% to $1.108225, hitting a high of $1.1155.
Meanwhile, the pound sterling fell by approximately 0.4% and stood at $1.3131, while against the Japanese yen, he dollar fell 0.7 percent to 142.42 yen, on track for a fourth straight session of losses.
The weight of employment data in the Fed’s decision
The non-farm payrolls Job openings increased by 142,000 last month after a downwardly revised increase of 89,000 in July, the Bureau of Labor Statistics said Friday. Department of Labor from the United States.
Economists polled by Reuters had forecast payrolls rising by 160,000 jobs after a previously reported increase of 114,000 in July.
“I think the market is really struggling with this because it’s really in the middle of what could be used as a justification for a 25 or 50 basis point rate cut,” he said. Gennadiy Goldberg, head of US rates strategy at TD Securities.
According to data from LSEG, Traders now see a 31% chance that the Fed will cut its benchmark rate, now in the 5.25% to 5.50% range, to a range of 4.75% to 5% at its next meeting on Sept. 17-18.
Before the report, they had seen a probability of about 43% of that outcome, and were leaning toward a quarter-point reduction.
“The US economy is more likely to collapse in the coming months, justifying an increasingly aggressive response from Federal Reserve officials,” he said. Karl Schamotta, chief market strategist at payments firm Corpay in Toronto.
“A half-point rate cut at the central bank’s September meeting remains unlikely, but today’s release provided clear evidence of a marked deterioration in labor market fundamentals and will reinforce bets on at least one large rate cut in the coming months,” he said.
Source: Ambito
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