After US August employment beat expectations, traders priced roughly a 60 per cent chance of a quarter-point Fed rate increase this month, up from approximately even odds before the release. The dollar recovered some ground on Friday, although the Bloomberg Dollar Spot Index still ended the week down 0.7 per cent. Stocks fell and the two-year US Treasury yield rose.
After US August employment came in stronger than expected, traders priced roughly a 60 per cent chance of a quarter-point Fed rate increase this month. The Japan Times put the odds at approximately even before the release. The dollar recovered part of its losses on Friday following stronger hiring. AP News also reported the above-expectation gain and investors’ view that there was greater room for a rate rise.[1], [2]
US employers added 162,000 jobs in August, exceeding expectations. Following the release, the S&P 500 declined 0.4 per cent and the two-year US Treasury yield rose to 4.37 per cent.[2]
The Bloomberg Dollar Spot Index ended the week down 0.7 per cent. Earlier in the week, the dollar had reached its weakest level since May after Fed Governor Christopher Waller pointed to progress on inflation. Chris Turner of ING Groep described the speech as a little more dovish than most had expected. CIBC Capital Markets strategist Noah Buffam said the dollar’s next trend move depends on next week’s consumer-price reading and its implications for the September meeting.[1]
