Latest U.S. Jobs Report and its Impact on Dollar

U.S. dollar

The dollar fell on Monday morning in Asia, hitting a pause on its recent gains, after the U.S. jobs report helped to soothe concerns about an earlier-than-expected hike in U.S. interest rates.

The U.S. dollar index that tracks the U.S. currency against a basket of other main currencies dropped 0.10% to 92.325 by 1:03 AM ET.

The USD/JPY pair added 0.9% to 111.15, with Japan’s services PMI for June at a higher-than-expected 48.

The AUD/USD pair declined 0.11% to 0.7517.  The Services PMI in Australia surpassed expectations and reached 56.8, while retail sales grew a better-than-expected 0.4% month-on-month in May. The NZD/AUD pair dropped 0.11% to 0.7018.

Moreover, the USD/CNY fell 0.15% to 6.4626. The Caixin services purchasing managers’ index (PMI) wast at 50.3 last month, lower than the 55.1 figure reported for May.

The GBP/USD pair was stable at 1.3821.


Jobs data, FOMC meeting, and dollar

The U.S. jobs report for June surpassed expectations, as non-farm payrolls grew by 850,000. But the unemployment rate was also higher than expected at 5.9%, easing concerns that the Federal Reserve would raise interest rates sooner than expected. The country’s economy is rapidly recovering, so more and more people will be able to find a job.

President Joe Biden responded to the latest jobs report on Friday. President Biden stated that the strong growth in employment reflects the success of his American Rescue Plan relief bill. The jobs report for June was the first to fully account for the impact of CDC’s May 13 announcement. Less than two months ago, the CDC announced that fully vaccinated no longer need to wear face masks outdoors in crowds or most indoor settings. This announcement helped to draw Americans back to the office buildings, and various activities people avoided in 2020.

Investors now await the minutes from Federal Open Market Committee’s meeting, to be released later in the week. Analysts and investors are waiting for minutes from FOMC’s meeting. It was at this meeting the Federal Reserve hinted at interest rate hikes beginning in 2023.

They also await a policy decision from the Reserve Bank of Australia. Although not expected to move its cash rate, some investors expected the central bank wouldn’t extend its three-year yield target. They also expected that the country’s central bank would adopt a flexible approach to bond purchases in the decision.

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