The US dollar dropped to multi-month lows against the euro and yen on Friday after data showed a slower-than-expected job market in the world’s largest economy. The Labor Department reported 151,000 jobs added last month, below the 160,000 expected by economists polled by Reuters.
This news raised concerns about the Federal Reserve’s interest rate decisions for the rest of the year. Rate futures now price in 78 basis points of easing, suggesting three rate cuts of 25bps each. The first rate reduction is likely to resume in June.
The euro continued its winning streak, gaining 4.6% against the dollar and reaching a four-month peak of $1.0888. BofA Global Research raised its year-end forecast for the euro to $1.15 from $1.10 previously.
In contrast, the greenback slid 0.2% against the yen to 147.65yen, falling to its lowest since early November. The dollar index has fallen 3.5% this week, on track for its worst weekly performance since November 2022.
The weaker-than-expected job market data and slower average hourly earnings may have been a relief for the Fed as they evaluate inflationary pressures in the labor market and broader economy. Treasury Secretary Scott Bessent said that the US economy may slow as it transitions away from public spending towards more private spending, calling it a “detox period” needed to reach a more sustainable equilibrium.
However, other markets remain volatile due to ongoing trade and economic growth uncertainties. The exemption of levies aimed at Mexico and Canada announced by US President Donald Trump offered little relief to whiplashed markets.
Source: https://www.cnbc.com/2025/03/06/euro-holds-4-month-peak-ahead-of-ecb-policy-decision.html