NEW YORK- The US dollar index stayed slightly lower on Friday after data showed US job growth slowed marginally in June while the unemployment rate rose, underscoring the view the Federal Reserve could begin cutting interest rates in September.
Nonfarm US payrolls increased by 206,000 jobs last month, the Labor Department report showed. Data for May was revised sharply down to show 218,000 jobs added instead of the previously reported 272,000. The unemployment rate rose to 4.1 percent , slightly higher than the estimated 4.0 percent .
Investors have been watching the labor market and inflation data closely as they try to gauge when the Fed could begin cutting rates from nearly two-decade highs.
The dollar index initially extended declines after the data. The dollar weakened against the yen before paring losses.
The dollar index which measures the greenback against a basket of currencies, was last down 0.28 percent at 104.87 and hit a three-week low early.
Against the Japanese yen the dollar weakened 0.34 percent to 160.73. It was near 160.45 just after the US payrolls data.
“We see rates coming down across the curve on confirmation of a moderation in US labor markets. The unexpected rise in the unemployment rate, the deceleration in wage gains and revisions in prior months’ headline gains all point to a slowing in labor market conditions,” said Karl Schamotta, chief market strategist at Corpay in Toronto.
“This is… raising the likelihood that we do see (Fed) Chair Powell put a September rate cut on the table either at the July policy meeting or at the Jackson Hole conference in August.”
Futures markets are now pricing in a roughly 72 percent chance for a 25 basis point rate cut at the Fed’s meeting in September, up from a 57.9 percent chance seen a week ago, according to CME’s FedWatch Tool.
