US Dollar Gains Fizzle After Strong NFP Report

The US Dollar saw a significant boost after the release of stronger-than-expected Nonfarm Payrolls (NFP) data, but its gains were short-lived. The NFP report showed that jobs rose by 162K in August, beating expectations for a 56K increase. This led to an initial jump in the USD/CHF pair to 0.8126, before it gave back some of its advance.

The Unemployment Rate remained steady at 4.1%, as expected, and the US Dollar Index (DXY) rose as high as 99.39 following the data release. However, both the DXY and USD/CHF pair have since lost momentum.

The strong employment figures have lifted expectations of a Federal Reserve rate hike at the September 15-16 meeting. According to the CME FedWatch Tool, markets now see around a 60% chance of a 25-basis-point increase, up from roughly 50% before the NFP release.