A significant miss in US non-farm payrolls data for June, with only 57,000 jobs added versus expectations of 110,000, and downward revisions to prior months, triggered a broad-based weakening of the US Dollar across global markets [1][3][4][9]. The US Bureau of Labour Statistics reported that May's payrolls were revised down to 129,000 from 172,000, and the Labour Force Participation Rate fell to 62.15%, its lowest in five years [3][4][9]. This disappointing data led to a sharp repricing of Federal Reserve rate hike expectations, with the CME FedWatch tool showing the probability of a September hike dropping from nearly 65% to about 53% after the release [3][4][9]. Fed funds futures now price in a 30 basis point hike by year-end, down from 36bp earlier in the week [1].
The US Dollar Index (DXY) fell 0.15% to around 100.70, with the USD weakening against all major peers, most notably the New Zealand Dollar (-0.43%), Euro (-0.19%), and British Pound (-0.16%) [4][5]. The USD/JPY pair dropped sharply by 150 pips to 161.10, as speculation about possible Japanese FX intervention intensified following official comments that authorities are ready to act on currency fluctuations [1][7]. The British Pound appreciated to 1.3370 against the USD, up 1.3% for the week, its strongest performance in three months, while the Euro rose 0.16% to near 1.1455 [3][4].
Market participants scaled back expectations for further Fed tightening, with only a 17% chance of a July hike and a 53% chance for September, down from 28% and 65% respectively before the jobs data [3][4][9]. ING and Commerzbank analysts noted that while the softer jobs report curbs hopes for two Fed hikes, it is not weak enough to trigger a major dovish repricing, and DXY is expected to stabilize in the 100.0-101.5 range in the near term [1][2]. Wells Fargo expects the Fed to keep rates on hold, viewing recent inflation as supply-driven and seeing no signs of an overheating labor market [6].
The weaker US data boosted safe-haven demand for gold, which rallied 1.4% on Friday to $4,182.28/oz and was on track for a 2.3% weekly gain, its first since late May [8][9]. Lower Treasury yields and a softer dollar improved the appeal of non-yielding assets, with central bank buying (notably by Poland and China) providing additional support [8]. Silver and platinum also posted strong gains, with silver up 2.9% and platinum 2.8% on the day [9]. OCBC strategists described the outlook for gold as 'cautiously constructive,' noting that further gains depend on continued soft US data and a less hawkish Fed [9].
In the FX space, the Japanese Yen benefited from both the weaker dollar and heightened intervention risks, though actual intervention had not occurred as of Friday [1][7]. Japanese officials reiterated their readiness to act on currency volatility, which prompted some unwinding of speculative short positions in the Yen [7]. The GBP/JPY cross remained near 215.00, with the Pound supported by the incoming UK Prime Minister's commitment to fiscal discipline [7].
Elsewhere, the Euro advanced against the Canadian Dollar, supported by expectations for stable ECB policy and weaker oil prices weighing on the CAD [5]. The Canadian manufacturing PMI edged up to 53 in June, but this was insufficient to offset the drag from falling oil prices [5].
CONCLUSION
The weaker-than-expected US jobs report triggered a broad selloff in the US Dollar, boosted gold and other precious metals, and lifted major currencies including the Euro, Pound, and Yen. Market participants have scaled back Fed rate hike expectations, with analysts anticipating near-term stabilization in the dollar and continued focus on incoming US data. The market impact is high, with safe-haven assets and intervention risks in the Yen remaining key themes.