- The US dollar index makes a comeback after dipping nearly 1.5% on Friday.
- The recent US employment report has raised the likelihood of two Federal Reserve interest rate cuts.
- The spotlight is on the Trump administration’s rejection of BLS commissioner Erica Mantelfer following disappointing employment figures.
The US Dollar Index (DXY), which evaluates the value of the US Dollar (USD) against six key currencies, has stabilized after experiencing a 1.5% decline in the previous session. Currently, DXY is trading at approximately 98.70 during Asian trading hours on Monday.
A disappointing employment report from the US that was released on Friday has impacted the dollar negatively, leading to speculation about potential interest rate cuts by the Federal Reserve. Traders are now anticipating a cumulative reduction of 63 basis points (BPS) by the end of the year, with the first cut expected on Thursday.
The US non-farm payrolls (NFP) revealed a 73,000 employment increase in July, revised down from a previous estimate of 147,000 in June, which is significantly below the expected 110,000. To add to this, the unemployment rate edged up to 4.2% from June’s 4.1%, as anticipated.
Further complicating the situation is the Trump administration’s decision to dismiss Labor Statistics Bureau (BLS) committee member Erica Mantelfer in response to the lackluster employment report. This move appears to be part of a broader strategy to question the credibility of official inflation data, which could influence both markets and discussions surrounding Fed policies.
President Trump took to social media on Sunday to justify his decision, claiming that the BLS commissioner was accountable for “the biggest miscalculation of over 50 years” and pointed to the recent disappointing employment numbers as evidence.
