The Decline in Dollar May Extend on “‘Confusing” Jobs Report

Dollar decline

The odds of a June interest rate hike remain low as the latest U.S. jobs report will give the Federal Reserve reason to pause and suggests the Dollar’s recent setback can extend.

The headline non-farm payroll report smashed expectations at 339K against the 180K expected, surpassing April’s upwardly revised 294K.

This would have elicited a strong upside Dollar reaction in the months gone by as it suggested the Fed had more work to do to cool the economy and inflation.

But there are some confusing developments for investors as the household survey revealed an unexpected rise in the unemployment rate to 3.7% from 3.4% previously.

Wages meanwhile came in softer, with Average Hourly Earnings rising 0.3% month-on-month in May, below the 0.4% expected and a slowdown on April’s 0.4%, also hinting at the weakness in the jobs market.

Nothing here ‘screams’ a June rate hike, and the currency market agrees: the Dollar trades flat on the day at the time of writing as an initial knee-jerk spike was fade.

The Pound to Dollar exchange rate is nearly unchanged at 1.2512 and the Euro to Dollar rate at 1.0760.

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