Dovish Fed Sentiment Lifts EUR/USD to Near Two-Month High
The US dollar weakened against major currencies after a softer-than-expected jobs report in July. Nonfarm payrolls came in at -23k, missing expectations of +80k, and cumulative revisions for May-June were firmly negative at -103k. The unemployment rate fell to 4.1%, but the labour market participation rate declined to 61.4%, its weakest level since February 2021.
Fed's Barkin commented on the weakness in the data, pointing to continued resilient corporate earnings. However, the market now discounts 11bp of hike from the Federal Reserve at the next meeting in September, implying a more dovish stance than initially thought.
The dollar took a hit on Friday and lost ground against other G10 currencies, with EUR/USD rising briefly to 1.1581 - its highest level in almost two months.