Weak U.S. Jobs Data Spurs Dollar Slide as Markets Bet on September Fed Cut

The U.S. dollar clawed back a fraction of its steep losses on Monday after a weak July jobs report and a weekend shake-up of economic officials heightened bets that the Federal Reserve will begin cutting interest rates as soon as September. The dollar index edged up 0.2% to 98.86, partly reversing a slide of more than 1% on Friday that followed data showing payroll growth badly missing forecasts and large downward revisions to prior months. Against the Japanese yen the greenback traded around 147.60, about three yen below Friday’s high after a drop of more than 2%. The euro was little changed at $1.1560, while sterling eased to $1.3263. Short-dated Treasury yields extended their retreat, with the two-year note slipping to 3.6590%, a three-month low, as investors moved to price in easier monetary policy. Futures markets now assign better than a 95% chance that the Fed will cut rates at its 17 September meeting and see roughly 63 basis points of easing by year-end. Analysts said the outlook was further clouded by President Donald Trump’s dismissal of Bureau of Labor Statistics Commissioner Erika McEntarfer, accusations the agency manipulated employment data, and the unexpected resignation of Fed Governor Adriana Kugler. “Market reactions were swift and decisive,” said IG strategist Tony Sycamore, noting simultaneous declines in equities, the dollar and bond yields.