USD Exchange Rate Today: Impact of US Jobs Growth on the Market

The US Dollar Index (DXY), which measures the greenback’s fluctuations against six major currencies (EUR, JPY, GBP, CAD, SEK, CHF), increased by 0.08% to 101.19 in the US market.

USD Exchange Rate Today in the World

The US dollar rose in the last trading session, after data showed that US jobs growth was lower than expected in August, creating the premise for a moderate interest rate cut by the US Federal Reserve (Fed).

The U.S. Department of Labor’s Bureau of Labor Statistics reported that nonfarm payrolls increased by 142,000 jobs last month, after increasing by 89,000 jobs in July. Economists had forecast a gain of 160,000 jobs, following a previously reported gain of 114,000 jobs in July.

The dollar initially fell as the jobs data was released, but quickly recovered. The greenback also found support as stocks and other risk assets sold off over the weekend.

Currency Exchange Rates

Meanwhile, the EUR fell 0.3% against the USD, to 1.108225 USD. The pound fell about 0.4% to $1.3131. Against the Japanese yen, the dollar fell 0.7% to 142.42 yen, heading for a fourth straight session of declines.

Market Expectations

Traders are now pricing in a 31% chance that the Fed will cut its policy rate to a range of 4.75% to 5% at its next meeting scheduled for September 17-18. Before the report was released, the market was pricing in a 43% chance that the Fed would cut rates by 25 basis points.

According to Karl Schamotta, chief market strategist at payments firm Corpay in Toronto, “A 50 basis point rate cut at the central bank’s September meeting remains unlikely, but today’s statement provided clear evidence of a sharp deterioration in the labor market and will strengthen the case for at least one more major rate cut by the Fed in the coming months.”

Fed Policymakers’ Stance

Fed policymakers on September 6 hinted that they were ready to begin a series of interest rate cuts at the US central bank’s meeting in two weeks, noting that the labor market was cooling. Fed Chairman Jerome Powell signaled that the central bank’s focus was shifting from fighting inflation to preventing a deterioration in the labor market, and expressed support for the start of a monetary easing cycle in the near future.