US dollar falls after weak NFP data, as falling US rates weigh.
The US Dollar (USD) fell sharply on Friday, with the US Dollar Index (DXY) falling below 105.10. The Greenback’s price dynamics have been determined by disappointing US labor market statistics and dropping US bond yields, as weaker-than-expected Nonfarm Payrolls (NFP) provide investors confidence that the Federal Reserve (Fed) would not deliver any more raises.
Despite the Federal Reserve’s (Fed) recent restrictive policies, the US economy has demonstrated exceptional resilience, outperforming the rest of the world. its global peers, which had previously favored the USD. However, the labor market is showing signs of weakness, leading investors to believe that the Fed is nearing the end of its tightening cycle, which appears to be weakening the US dollar as the tightening impacts become obvious.
Daily Digest Market Movers: The US dollar falls as job creation slows and unemployment rises.
The US Dollar Index fell below 105.10, losing 1% on the day, owing to dismal labor market statistics released earlier in the day.
According to the US Bureau of Labor Statistics, nonfarm payrolls in October were lower than predicted. The US added 150,000 jobs in October, falling short of the predicted 180,000 and down from the revised prior figure of 297,000.
The Rate of Unemployment Comes in at 3.9% in October, more than the projected 3.8% and faster than the prior estimate of 3.8%.
The average hourly earnings climbed by 0.2% month on month but by 4.1% year on year, exceeding the projected 4% and the prior figure of 4.3%.
Furthermore, economic activity figures came in lackluster. The Services PMI from the Institute for Supply Management (ISM) fell short of forecasts. In October, the result was 51.8, lower below the consensus of 53 and its previous figure of 53.6.
Similarly, the S&P Global Services PMI for October was 50.6, lower than the projected 50.9 and slower than the prior number of 50.9.
Meanwhile, US Treasury yields have continued to fall. The two-year rate declined to 4.90%.The 5-year rate fell to 4.50%, its lowest level since mid-September, while the 10-year rate fell to 4.54%, also a multi-week low.
Because of the poor data, dovish bets on the Fed have surged. According to the CME FedWatch Tool, the odds of a 25 basis point raise in December have dropped to 9%, adding to the Greenback’s selling pressure.
