The US Dollar (USD) experienced broad weakness on Friday following a disappointing US Nonfarm Payrolls (NFP) report for June, which showed a net increase of only 57,000 jobs, significantly below the market consensus of 110,000 [1][2]. This data led to a sharp reduction in expectations for imminent Federal Reserve (Fed) rate hikes, with the probability of a July hike dropping to 18% from nearly 30% and September hike odds falling to 52% from 65% prior to the data release, according to the CME Group's FedWatch Tool [1][2]. The unemployment rate, however, unexpectedly ticked down to 4.2% from May's 4.3% [2].
In the currency markets, the Australian Dollar (AUD) appreciated for the second consecutive day against the USD, with AUD/USD approaching the 0.6950 level after rebounding from 0.6865 lows. The pair was on track for a 0.6% weekly rally after a previous two-week decline of over 2%. This move was supported by unexpectedly strong Australian S&P Global PMI data, with the Manufacturing PMI rising to 50.4 (vs. 49.8 expected) and Services PMI improving to 50.5 (vs. 49.9 expected) [1]. Technical indicators for AUD/USD turned bullish, though the broader bearish structure remains intact, with resistance seen at 0.6950, 0.6976, and 0.7000, and support at 0.6935, 0.6885, and 0.6865 [1].
The Japanese Yen (JPY) steadied after recent volatility, with USD/JPY trading around 161.10. Speculation increased that Japanese authorities might intervene in the currency market, as Finance Minister Satsuki Katayama reiterated readiness to act and highlighted close coordination with the US [2]. Thin liquidity over the US holiday weekend was seen as a potential window for intervention. The USD/JPY upside was restrained by the weaker US Dollar and reduced Fed rate hike bets [2].
Meanwhile, the EUR/JPY cross rose to around 184.50 after two days of losses, though it maintained a bearish near-term tone as it traded below key moving averages. The technical outlook suggested a temporary balance of power between buyers and sellers, with resistance at 185.90 and support at 183.50, 181.87, and 180.81 [3]. The Euro was the strongest against the Japanese Yen in the daily percentage change table [3].
Across the board, the US Dollar was weaker against most major currencies, including a 0.30% decline versus the AUD and a 0.17% decline versus the EUR, while it was marginally stronger against the JPY by 0.06% [1][3].
CONCLUSION
The disappointing US jobs report triggered a broad sell-off in the US Dollar, boosting the AUD and EUR while the JPY steadied amid intervention risks. Market participants sharply reduced expectations for near-term Fed rate hikes, leading to heightened volatility and shifting currency dynamics. The outlook remains sensitive to further economic data and potential policy actions, particularly from Japanese authorities.