US NFP Reversal Crushes Fed Hike Expectations, Boosts Euro
The US Nonfarm Payrolls (NFP) report for July was significantly weaker than expected, leading to a sharp decline in the US Dollar (USD). The Bureau of Labor Statistics reported that NFP fell by 23K jobs in July, contrary to market expectations of an increase of 80K jobs. This reversal has reduced bets on a Federal Reserve (Fed) rate hike at the September meeting.
The chance of a 25-basis-point rate hike at the September meeting has fallen to just 44%, down from 55% a day earlier and 67% a week ago, according to the CME FedWatch Tool. The US Dollar weakens sharply following the release, as investors reduce their bets on tightening monetary policy.
The EUR/USD pair jumps 0.43% on the day and trades around 1.1570 at the time of writing, benefiting from the decline in the US Dollar.