Markets trimmed Federal Reserve rate hike bets after July nonfarm payrolls missed forecasts by 103k, lifting the euro.
The euro rose to 1.1581 against the US dollar, its highest level in nearly two months, after US nonfarm payrolls fell 23k in July, well below the 80k consensus forecast. Revisions for May and June subtracted another 103k jobs, while the unemployment rate dipped to 4.1% despite a drop in labor force participation to 61.4%.
Analysts noted the mixed signals, with weaker-than-expected job growth contrasting a still-declining unemployment rate. Markets now price in just 11 basis points of Fed tightening for September, down from earlier expectations. Upcoming US inflation and Eurozone GDP data are seen as key drivers for the currency pair.
The dollar weakened broadly against G10 currencies following the report, as traders reassessed the Fed’s policy path amid signs of labor market softening.