Dollar slides after weak US jobs data dents Fed hike bets

The dollar dropped to a near two-week low on Monday, extending a slide that began after Friday's US jobs report ran softer than expected. Traders reduced expectations for another Federal Reserve rate increase this year, narrowing the greenback's rate advantage over the euro and yen, several traders said.

The euro climbed above $1.1050 for the first time since mid-July, a move detailed in our EUR/USD profile. Sterling pushed through $1.2750. The yen strengthened past 143 per dollar, a level not seen since early June. The moves reflected a broad repricing of Fed expectations rather than any euro-area or UK-specific catalyst, traders said.

The weaker dollar rippled into commodity-sensitive currencies. Australia's dollar touched $0.6700, supported by gains in base metals in London. New Zealand's dollar rose alongside dairy prices at the Global Dairy Trade auction. The Canadian dollar was also firmer as oil held near $78 a barrel. All three fell through late July during the dollar's rally. The jobs data reversed some of that pressure.

Gold climbed above $1,950 an ounce, its highest in a month. The inverse relationship with the dollar was the main driver, with traders pricing a flatter US rate path. Industrial metals and crude oil both gained. The weaker dollar lowered costs for buyers using other currencies, pushing prices higher.