US Dollar Hits Multi-Week Low After Soft Jobs Report

What’s going on here?

The US dollar is hovering around multi-week lows following a softer-than-expected jobs report released last Friday.

What does this mean?

The US dollar index, which tracks the greenback against six major peers, fell to 104.99, just above an overnight low of 104.80 – its weakest point in three and a half weeks. Last week’s index dropped 0.9%, driven by a disappointing monthly payrolls report. Traders are now laser-focused on Federal Reserve Chair Jerome Powell’s upcoming testimony, seeking clues on future interest rate decisions. Powell is set to speak before the Senate on Tuesday and the House on Wednesday. Meanwhile, the CME Group’s FedWatch Tool shows the odds of a rate cut in September have jumped to 76%, up from 66% the previous week. Plus, consumer price data due on Thursday is expected to provide more insight into inflation trends, which have been cooling recently.

Why should I care?

For markets: Eyes on Powell and price data.

Market players are eagerly awaiting Powell’s testimony for any hints on the future path of interest rates. The recent soft jobs report has stirred speculation about more rate cuts, influencing traders’ expectations. Consumer price data set for release on Thursday will be another key factor, potentially impacting market sentiment further if inflation continues to cool.

The bigger picture: A stable Europe amidst US uncertainty.

Despite France’s hung parliament and subsequent political uncertainty, the euro has remained stable, trading at $1.0827, close to a four-week high. Investors view the fiscal policy inertia resulting from this political gridlock as a more favorable scenario compared to possible far-right or leftist victories. Meanwhile, sterling held steady at $1.28085 after touching its highest level since mid-June, and the yen stayed firm at 160.91 per dollar, rebounding from historical lows.