Weak jobs growth in US leads to sell-off in equities and dollar due to rate cut expectations.

From Investing.com: 2024-08-02 10:34:00

In July, the US economy added only 114K jobs, way below expectations, with the private sector adding 97K jobs, the smallest increase since March last year. Unemployment rate rose from 4.1% to 4.3%, missing expectations. Wage growth disappointed, coming in at 0.2% m/m and 3.6% y/y. Market reacted by selling off equities and the dollar dropped due to expectations of a rate cut in September and further cuts by year-end.

Expectations of a dovish Fed have driven equity rally, with interest rate futures now pricing in an 80% chance of a 50-point rate cut in September, up from 20%. Fresh data isn’t catastrophic yet, but could lead to multiple cuts by year-end, impacting equity markets positively but negatively impacting the dollar. US dollar reacted sharply to the weak data, falling due to rate cut expectations, leading to an increase in and . Short-term market reactions can be deceiving, as risk-taking in equity markets could eventually lead to a dollar rebound. EURUSD could fall to 1.05 if it fails to consolidate above 1.09.



Read more at Investing.com: Weak Jobs Growth Sparks Simultaneous Sell-off in Equities and Dollar