The US Dollar Index (DXY), which measures the Greenback against six major currencies, edged down to near 100.80 during the Asian trading session on Friday, reflecting pressure on the US Dollar as traders reassessed their expectations for a hawkish Federal Reserve stance following the release of June Nonfarm Payrolls (NFP) data on Thursday [1]. The US Dollar was notably weakest against the New Zealand Dollar, falling by 0.21%, and also declined against other major currencies such as the British Pound (-0.10%), Euro (-0.06%), Canadian Dollar (-0.07%), Australian Dollar (-0.16%), and Swiss Franc (-0.08%). It gained slightly against the Japanese Yen (+0.06%) [1].
The CME FedWatch tool indicated that the probability of the Federal Reserve implementing at least one interest rate hike at its September policy meeting dropped to 53.2%, down from nearly 64% the previous day, as traders reduced their hawkish bets [1]. This shift was prompted by the US NFP data, which showed the economy added only 57,000 jobs in June, well below the estimated 110,000. Additionally, May's job creation figure was revised downward to 129,000 from 172,000 [1]. Despite the disappointing job numbers, the Unemployment Rate improved, falling to 4.2% compared to both the previous reading and estimates of 4.3% [1].
Average Hourly Earnings, a key indicator of wage growth, increased by 3.5% year-on-year, matching expectations and accelerating from the previous 3.4% reading [1]. Looking ahead, the next significant event for the US Dollar will be the release of the US ISM Services Purchasing Managers’ Index (PMI) data for June on Monday. Investors are expected to closely monitor this report, as the services sector represents two-thirds of the US economy [1].
CONCLUSION
The US Dollar Index weakened following a disappointing June jobs report and reduced expectations for a Fed rate hike in September. Market participants are now awaiting the upcoming ISM Services PMI data for further direction. The overall sentiment is cautious, with the Dollar under pressure amid shifting monetary policy expectations.