Strong NFP Report Boosts US Dollar, Reduces Rate Cut Sentiments
A better than expected jobs report from the US has helped the dollar climb higher at the start of a new trading week. At the time of writing, the US dollar index DXY is trading at 97.23.
After a weak NFP data release in May, June’s report showed a growth in non-farm jobs by 224,000 – higher than the 160,000 expected and the highest in five months. This strong jobs report is especially beneficial for the USD at a time when markets have been anticipating an impending rate cut by the Fed, as soon as July.
As of now, the likelihood of the Fed cutting interest rates by 0.5% in July are virtually nil. However, wage growth and other data continue to remain moderate, so markets are expecting a 0.25% rate cut in July.
This week, the focus shifts to Fed Chairman Jerome Powell’s testimony before the Congress, due to take place on Wednesday and Thursday as well as the upcoming FOMC meeting minutes, as markets look for clues on whether the Fed will cut rates at its meeting this month.
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