The dollar experienced a modest uptick in volatile trading on Friday following the release of mixed U.S. employment data for August. Nonfarm payrolls increased by 142,000 jobs, slightly below economists’ expectations of 160,000 jobs and following a downwardly revised 89,000 rise in July, according to the Labor Department’s Bureau of Labor Statistics.
Despite an initial decline against major currencies, the dollar rebounded to trade higher. The euro dipped 0.3% to $1.1078, after briefly rising to $1.1155 post-report. The Dollar Index, which measures the U.S. currency’s performance against six major peers, increased by 0.3% to 101.32.
Market reactions indicate uncertainty about the Federal Reserve’s next move. “The market is caught between scenarios that could justify either a 25 or 50 basis point rate cut,” said Gennadiy Goldberg, head of U.S. rates strategy at TD Securities.
Current trader expectations suggest a 39% chance of a rate cut at the Fed’s upcoming meeting on September 17-18, down from a previous 43%. Analysts believe the U.S. economy may require significant rate adjustments, though a half-point cut this month seems unlikely. Karl Schamotta, chief market strategist at Corpay, noted that while a jumbo-sized rate cut is not imminent, the data reflects a marked deterioration in labor market conditions.
The dollar rose 0.2% to 143.75 yen, aiming to end a three-day losing streak against the Japanese currency. Safe haven demand and anticipated rate hikes from the Bank of Japan have recently supported the yen.
Fed officials, including New York Fed President John Williams, have indicated that economic conditions may justify future rate cuts. Fed Chair Jerome Powell has shifted focus from inflation control to mitigating job market deterioration, as discussed at the Jackson Hole conference.
The British pound remained stable at $1.31825. The Bank of England’s upcoming meeting is expected to yield little change in rates this month, but a quarter-point cut is anticipated in November.
In the cryptocurrency space, Bitcoin gained about 1% to reach $56,720.
