Dollar Slumps as Labour Data Dampens Hike Expectations

The US dollar has extended its losses after weaker-than-expected labour data reduced expectations for a September Federal Reserve hike.

Societe Generale's Kenneth Broux notes that the sudden softening of the labour market has invited a revaluation of the tactical outlook and thrown open the debate about the Fed's dual mandate.

The employment situation has put the Fed's outlook in a different light, raising questions for the direction of the bond and FX markets in the second half of the year.

The pricing for a hike in September has been whittled back to less than 50% from 72% at the end of July, with one move remaining priced for December.