US Dollar Fails to Capitalize on Strong Employment Figures
The US dollar showed little reaction to strong employment data in August, which was expected to boost its value. The greenback's lackluster performance can be attributed to stability in futures markets and investor expectations of monetary policy tightening by the Federal Reserve (Fed). The CME derivatives forecast a 60% probability of a federal funds rate hike in September.
The rise in non-farm payrolls by 162,000 in August, exceeding consensus forecasts, was expected to increase pressure on the Fed to raise interest rates. However, the unemployment rate remaining steady at 4.1% suggests that monetary tightening is not imminent.
Investors are now awaiting US inflation data for August to gauge the Fed's next move. Meanwhile, Finance Minister Scott Bessent believes Treasury bond yields will fall once the conflict in the Middle East ends and oil prices drop to $40-50 per barrel.