Dollar Set for Biggest Weekly Drop in Nearly Three Months as June Jobs Data Softens Rate-Hike Bets

The U.S. dollar was poised on Friday to post its biggest weekly decline in nearly three months after a weak June employment report pushed back market expectations for further Federal Reserve rate hikes. According to Jin10, the cooling in U.S. job growth in June led traders to scale back expectations for a near-term Fed hike. The market was pricing a 52% chance of a rate increase at the September meeting, down from 64% in the previous session. U.S. Treasury yields also retreated from earlier highs, and the two-year Treasury yield ended a three-day streak of gains. Sim Moh Siong, a foreign-exchange strategist at Oversea-Chinese Banking Corp., said the data was marginally dovish and helped ease concerns about an overheating labor market and the need for more aggressive policy tightening. He added that as long as expectations for Fed tightening remain unchanged, the dollar’s overall outlook remains constructive, especially against low-yielding currencies.