Dollar Slides as Surprising Job Losses Spark Rate Hike Worries

The US dollar declined against major currencies on Friday after data showed an unexpected decline in employment numbers for July. The Labor Department reported that the economy lost 23,000 jobs last month, falling short of economists' expectations for a gain of 80,000.

Data also revealed that the unemployment rate dropped to 4.1% and the labor participation rate reached a near five-and-a-half-year low of 61.4%. The dollar's weakness against the yen was largely attributed to this report, shedding gains made after a historic intervention between Japanese and US authorities last week.

Thierry Wizman, global FX and rates strategist at Macquarie Group, stated that 'the big drop that we saw this morning is almost wholly related to the US employment report for July because I think no one really expected non-farm payrolls to be negative or that there would be a big downward revision in the June numbers.'

Markets are now pricing in a nearly 56% chance that the Fed will hold rates in September, up from 45% a day earlier. The euro rose against the dollar by 0.31%, and gold prices increased as the US dollar fell.