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The dollar index (DXY) rose by +0.08% today after hitting a 1.5-month low, supported by higher Treasury yields and short covering. Preliminary payroll revisions indicated a loss of -911,000 jobs in the U.S. through March 2025, exceeding expectations of -700,000, reflecting a weaker labor market.
Market expectations have shifted to a 10% chance of a 50 basis point rate cut at the upcoming Federal Open Market Committee (FOMC) meeting on September 16-17, with an 81% probability of a second -25 basis point cut by October 28-29, moving the federal funds rate down to 3.63% from 4.38% by year-end.
In Europe, the euro fell -0.21% after French manufacturing production in July declined -1.7% month-over-month, worse than the anticipated -1.2%. Additionally, political instability in both France and Japan is affecting currency values, with Japan’s Prime Minister Ishiba announcing his resignation amid a loss of parliamentary majority.
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