Dollar Tumbles on Dismal US Jobs Report

The dollar sank against most major currencies on Friday (Jun 3) after a shockingly weak US jobs report that essentially ruled out a Federal Reserve interest rate increase later this month.

The Labour Department report, showing the economy added a mere 38,000 jobs in May, the smallest number in nearly six years, caught investors by surprise. Analysts had expected 155,000, and the numbers for the two prior months were revised lower.

The dismal numbers were expected to give the Federal Reserve reason to hold rates steady at the Jun 14-15 policy meeting, and possibly in the coming months.

The dollar lost 2.0 per cent to US$1.1364 per euro, and fell 2.1 per cent to 106.63 yen.

Recent remarks by Fed officials, including Chair Janet Yellen, had highlighted the prospect of a rate hike this month or the next.

“The softness of today’s report has caused the market to downgrade its expectations for a summer rate hike, and the question now is how that affects Janet Yellen’s thinking,” said Kathy Lien of BK Asset Management.

“The weakness of Friday’s report will have investors eyeing every positive comment from Yellen with skepticism.”

On Monday, Yellen is scheduled to give a speech on the economic outlook and monetary policy in Philadelphia, Pennsylvania.

The pound, which slid earlier in the week on uncertainty over Britain’s Jun 23 referendum on whether to leave the European Union, clawed back some ground against the dollar.

Courtesy : channelnewsasia.com