USD Falls on Weak Data and Rising Unemployment

US Dollar declines due to weak economic data and rising unemployment. Fed rate cut chances increase as markets await key inflation data and Fed commentary.

Published on 10 July 2024

, 1 minute read

Here’s this week’s overview of the US Dollar:


  • The DXY was weighed down by soft US economic data which reinforced a dovish outlook on Federal Reserve monetary policy.

    On Friday, data showed that the US unemployment rate rose to a two and a half year high of 4.1% in June, adding to signs of a cooling labour market, even if this unemployment rate remains very low by historical standards.

    A stronger than expected payrolls number was not enough to strengthen the dollar due to the rising unemployment figures.


  • Previous data also pointed to weak services activity and private employment in the US. Markets now see a 76% chance of a Fed rate cut in September, with a second rate reduction in December also being priced in.


  • Investors now look ahead to key US inflation data this week, as well as fresh commentary from Fed officials to guide the rates outlook further.


  • The political landscape also shifted in the past week with the supreme court giving a favourable ruling to Trump, essentially pushing his legal troubles past the November election date.

    The Democrat party appears to be in disarray with calls from within the party for Joe Biden to step down after a weak debate performance, despite there being no obvious candidate to replace him.

    Vice President Kamala Harris and Gavin Newsom are the current favourites to step in should the sitting President bow out. Since the debate, Trump has pulled ahead, gaining a slender 2.3% lead in the polls, which can only increase attention on exactly how populist his economic policies would be and what that would mean for currency markets.

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