Currency News: Employment Report Hurts Dollar Strength
Currency News
Employment Report Hurts Dollar Strength
Employment data released last Friday, June 3rd, revealed that last month, nonfarm payrolls increased by less than 40,000 jobs. This was the smallest growth number in close to 6 years and was significantly lower than forecasts for 164,000 new jobs.
With this disappointing employment growth, expectations for the Fed to raise interest rates in June have essentially disappeared. Further, investors see the likelihood of a rate hike in July diminished from around 60% to just 30%.
Without expectations for a rate hike from the Fed in June or July, the strength of the dollar slid to 3-week lows against multiple major currencies and experienced the second biggest one-day drop of the year on Friday.
Previously, the dollar had risen in May against other currencies when Fed Chair Janet Yellen and other bank officials pointed towards the possibility of higher interest rates which could be supported by the economy. After this U.S. jobs report, investors are looking to see what Yellen will say in an upcoming speech in regards to the future direction of U.S. interest rates.
The weakened U.S. dollar has boosted the price of gold as investors see it as a “safe haven asset”. Plus, the price of copper hit 4-week highs and Brent crude oil surpasses $50 a barrel on the weak dollar and unlikely rate hike from the Fed.
