U.S. dollar slips after weak June jobs data, heading for biggest weekly loss since April
U.S. dollar falls after weak June jobs report, poised for largest weekly loss since April; euro and pound climb while yen steadies amid intervention fears.
The U.S. dollar weakened on Friday and looked set to post its largest weekly loss since April after a softer-than-expected June jobs report prompted investors to dial back bets on an imminent Federal Reserve rate hike. The move helped lift the euro and sterling and eased pressure on the troubled Japanese yen as markets reassessed the near-term trajectory for U.S. monetary policy. Currency traders said the payrolls slowdown, together with negative revisions to prior months, was the principal catalyst for the dollar’s decline.
U.S. dollar heads for largest weekly slide since April
The U.S. dollar pared gains across major pairs as market participants reduced the likelihood of further Fed tightening in the coming weeks. Over the week the dollar fell roughly in line with market expectations of slower U.S. wage and job expansion, placing it on track for its biggest weekly decline since April. Traders highlighted that the shift in expectations materially altered short-term flows into and out of dollar-denominated assets.
Weak June payrolls cool expectations of a Fed hike
Data showing a marked slowdown in U.S. job growth for June, along with downward revisions to employment in previous months, was central to the market reaction. Economists said the numbers raised doubts about the persistence of U.S. inflationary pressure and made an immediate policy move less likely from the Federal Reserve. Market pricing now reflects a lower probability of a near-term rate increase, prompting investors to reprice interest-rate differentials between the United States and other major economies.
Euro and pound gain as dollar softens
The euro moved toward a two-week peak at about $1.1454 after the dollar’s retreat, benefiting from improved risk appetite and the recalibration of rate expectations. The pound strengthened to around $1.3371, registering its best weekly advance in nearly three months at about 1.2 percent. Currency strategists noted that both European currencies gained not only from dollar weakness but also from flows into assets viewed as alternatives to dollar holdings.
Japanese yen stabilises amid intervention risk
The Japanese yen steadied around 161.03 per dollar after recent extreme swings that pushed it near multi-decade lows. Market participants remained wary of possible official intervention in foreign exchange markets following a sudden Thursday move that pulled the yen away from its weakest levels in about 40 years. Traders said any further disorderly depreciation could prompt Japanese authorities to act, keeping the yen’s path susceptible to policy responses.
Investor positioning and market reactions
Risk-sensitive assets broadly benefitted from the dollar’s decline as investors adjusted portfolios to reflect lower U.S. rate expectations. Fixed-income and foreign-exchange desks reported increased activity as clients covered dollar-long positions and sought currency exposure elsewhere. Volatility spiked briefly on the payrolls release but markets settled as traders digested the implications for central bank policy and cross-border capital flows.
Policy outlook and near-term market risks
With the dollar pullback now priced into market levels, attention will shift to incoming U.S. data and commentary from Federal Reserve officials for signals on policy direction. Investors will also be watching economic indicators from Europe and Japan for signs that could sustain the current currency moves or reverse them. Analysts cautioned that geopolitical developments, shifts in commodity prices, or unexpected policy statements could quickly reshape market expectations and currency trajectories.
Sentiment in global markets has pivoted sharply on the jobs data, underscoring how sensitive exchange rates remain to changes in the outlook for interest rates. The coming days will test whether the dollar’s slide is a sustained correction or a temporary move as traders await further economic evidence and central bank signals.