The US dollar index (DXY) fell to a 7-week low today, down by 0.34%, following a disappointing July payroll report that showed nonfarm payrolls dropped by 23,000, against expectations of an increase of 80,000. This marked the first decline in five months. Additionally, the unemployment rate unexpectedly fell to a 13-month low of 4.1%, while average hourly earnings rose by just 0.1% month-over-month, below the anticipated 0.3% increase. The probability of a rate hike by the Federal Reserve at the next FOMC meeting is now estimated at 44%, down from 58% prior to the report.
In the eurozone, the euro strengthened, rising by 0.33% against the dollar, supported by positive German trade data showing June exports rose by 0.9% month-over-month, surpassing forecasts of 0.5%. The European Central Bank is now expected to have an 85% likelihood of a 25 basis point rate increase at its next policy meeting on September 10.
As a reaction to the dollar’s decline, gold prices surged, climbing 2.30% to a 7-week high, bolstered by reports of enhanced gold reserves held by China’s central bank, which increased by 640,000 ounces in July. Silver also rose by 3.64%. This reflects a shift in market sentiment towards precious metals amid speculations of potential monetary easing by the Federal Reserve.
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