The U.S. dollar extended its slide on Monday, building on losses from Friday following a disappointing jobs report that fueled speculation of imminent Federal Reserve rate cuts.
As of 04:20 ET (08:20 GMT), the U.S. Dollar Index — which measures the greenback against six major currencies — dipped 0.2% to 98.722, after tumbling over 1% at the end of last week.
Dollar Weakens Amid Rate Cut Bets
Friday’s nonfarm payrolls report revealed only 73,000 new jobs in July, far below expectations, alongside significant downward revisions to May and June. The unemployment rate also climbed to 4.2%, deepening concerns about a softening labor market and pushing market odds of a Fed rate cut in September to around 90%.
Bond yields responded accordingly: the two-year Treasury yield fell to a three-month low of 3.659%, while the 10-year yield hovered near a one-month low at 4.249%.
In a dramatic political move, President Donald Trump fired Bureau of Labor Statistics Commissioner Erika McEntarfer, accusing her — without evidence — of fabricating employment data.
Analysts at ING noted, “Doubts over the reliability of U.S. economic data could inject extra risk into both the dollar and Treasuries.” They also pointed out the potential market impact of this week’s $125 billion in Treasury auctions.
Fed Leadership Uncertainty Adds Pressure
Further pressure on the dollar came from the sudden resignation of Fed Governor Adriana Kugler, opening a path for Trump to nominate a more dovish successor — potentially shifting the internal balance at the Fed and increasing pressure on Chair Jerome Powell.
ING analysts stated, “A new appointment could tip the balance further toward rate cuts.”
Euro Holds Ground, Franc Hit Hard
The euro edged down 0.2% to 1.1563 on Monday but remained firm after Friday’s rally. ING sees support near 1.1500 and suggests 1.1700 as a possible target in the coming weeks. Spain added to the eurozone’s positive tone, reporting that registered unemployment fell to 2.4 million in July — the lowest since mid-2008.
The British pound slipped 0.1% to 1.3274, while USD/CHF climbed 0.6% to 0.8085, as the Swiss franc continued to feel the impact of Trump’s newly imposed tariffs. Analysts warned the move could deepen deflationary pressures in Switzerland, with inflation hovering near zero.
Yen and Yuan Move on Sentiment
USD/JPY rose 0.3% to 147.94, with the yen giving back some of last week’s safe-haven gains. Meanwhile, AUD/USD inched up 0.1% to 0.6482.
The Chinese yuan strengthened, with USD/CNY falling 0.5% to 7.1763, after U.S. Treasury Secretary Scott Bessent expressed optimism about trade talks with Beijing, suggesting that a deal might be within reach.
