Dollar drops as jobs growth disappoints, unemployment rises

FE Team | Published: August 02, 2024 22:32:26

NEW YORK, Aug 2 (Reuters): The U.S. dollar dropped on Friday after a weaker than expected employment report for July raised expectations that the Federal Reserve will cut interest rates by 50 basis points in September in an attempt to stave off a severe economic downturn.
Employers added 114,000 jobs, below expectations for an increase of 175,000. The unemployment rate rose to 4.3 per cent, above economists expectations that it would be unchanged on the month at 4.1 per cent.
"This is what a growth scare looks like. The market is now realizing that the economy is indeed slowing," said Wasif Latif, president and chief investment officer at Sarmaya Partners in Princeton, New Jersey.
Traders are now pricing in 70 per cent probability that the Fed will cut rates by 50 basis points in September, up from 31 per cent before the data was released and from 22 per cent on Thursday, according to the CME Group's FedWatch Tool.
A cut of at least 25 basis points is fully priced in and more than 100 basis points of easing is now expected by year-end.
The dollar index was last down 0.85 per cent at 103.47, the lowest since March 21.
The euro gained 0.9 per cent to $1.0888. The greenback weakened 1.23 per cent to 147.53 Japanese yen and got as low as 147.02, the lowest since March 12.