Dollar hits four-month low as weak jobs data boosts rate cut bets
employment report for July raised expectations that the Federal Reserve will cut interest rates by 50 basis points in September as the economy sours.
Employers added 114,000 jobs, below expectations for an increase of 175,000. The unemployment rate rose to 4.3%, above economists expectations that it would be unchanged on the month at 4.1%.
«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.
The U.S. Labor Department also said that Hurricane Beryl, which made landfall in Texas on July 8, had «no discernible effect» on the data.
«There's no silver lining anywhere as far as I can tell. They say they didn't have any kind of hurricane effects, and if they did, it's not enough to offset the degree of softness that we're seeing,» said Steve Englander, head of global G10 FX research at Standard Chartered's New York Branch.
Traders are now pricing in a 71% probability that the Fed will cut rates by 50 basis points in September, up from 31% before the data was released and from 22% on Thursday, according to the CME Group's FedWatch Tool.
A cut of at least 25 basis points is fully priced in for September and more than 100 basis points of easing is now expected by year-end.
The Fed kept interest rates unchanged at the conclusion of its two-day meeting on Wednesday and Fed Chair Jerome Powell said that interest rates could be cut as soon as September if the U.S.
