US Dollar Tanks as Jobs Report Reveals Surprise Contraction
The latest US non-farm payrolls report revealed an economy in worse shape than expected. The data showed a significant contraction, with the economy shedding 23K jobs in July, far below the estimated +80K.
This is a stark contrast to the prior two reports, which were revised lower by a combined 103K jobs. As a result, the three-month average for job growth dropped to just 20K jobs.
The market had been pricing in a rate hike in September at 57%, but this has fallen to 44% after the data release. The US dollar took a hit across the board, with USD/JPY plummeting by 127 pips to 157.14.
The Canadian dollar also gained against the US dollar as Canada's employment report showed an unexpected increase of 75.1K jobs compared to the estimated 15.0K.
The drop in the dollar and recalibration of Fed rate expectations have benefited gold, which has jumped $122 to $4360 today.