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FOREX-Dollar falls to 2-1/2 month low after U.S. jobs data disappoints

Published 06/07/2019, 09:22 PM
Updated 06/07/2019, 09:30 PM
© Reuters. FOREX-Dollar falls to 2-1/2 month low after U.S. jobs data disappoints
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(Adds broader currency market reactions, report details,
analyst quotes, rate cut expectations)
By Kate Duguid
NEW YORK, June 7 (Reuters) - The U.S. dollar index .DXY
fell on Friday morning to its lowest since March 26 after the
Labor Department's employment report showed that job growth
slowed sharply in May and wages rose less than expected.
The weak data suggest that the loss of momentum in economic
activity has spread to the labor market, which could increase
expectations that the Federal Reserve will cut interest rates
this year. Rising expectations of a cut have pulled the dollar
1.2% lower this week.
"It's a soft report. It's a soft enough report that a June
rate cut should probably be on the table for discussion," said
Greg Anderson, global head of foreign exchange strategy at BMO
Capital Markets in New York.
Nonfarm payrolls increased by 75,000 jobs last month,
falling below the roughly 100,000 needed per month to keep up
with growth in the working-age population. "Unlike a lot of the reports we've seen where the headline
is strong and the details are soft, or vice versa, this is just
soft. Headline is soft, details are soft," said Anderson, noting
that the average duration of a spell of unemployment rose
substantially and the employed share of the population fell.
Expectations for a rate cut in June jumped to 30.8% on
Friday from 16.7% the day prior, according to CME Group's
FedWatch tool. The market is now pricing in a 28.4% chance of
two rate cuts and a 36.0% chance of three cuts by December.
Against the Japanese yen JPY= , the dollar weakened by
0.41%, last at 107.97. It was down 0.4% against the euro EUR=
to 1.132. Among the biggest movers was the Canadian dollar
CAD= which strengthened 0.43% to 1.331.



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