The dollar hit a seven-week low after July payrolls unexpectedly fell 23,000 and prior months were revised sharply lower. Futures repriced tightening odds lower, while White House pressure on the Fed added to headwinds. Gold surged past $4,300.
Alpha Score of 62 reflects moderate overall profile with moderate momentum, weak value, strong quality, moderate sentiment.
The dollar touched a seven-week low Friday after the July employment report showed an unexpected contraction. Nonfarm payrolls fell by 23,000, the first negative print since April 2020. Revisions to prior months deepened the damage: May was cut from 129,000 to 63,000, June from 57,000 to 20,000. Over the trailing six months the US economy has added an average of 44,000 jobs per month, a pace that last preceded a Fed rate cut.
Futures markets repriced quickly. The implied probability of a rate hike in September dropped to 46% from 67% a week ago, according to CME data. The probability of two hikes by year-end 2026 fell to 32% from 46%. That shift pulled the dollar lower across majors, with the euro climbing above $1.12 for the first time since early June.
Political pressure on the Fed added to the greenback's headwinds. The White House is pushing to remove Governor Lisa Cook from her post, traders said, and reports of direct conversations between Donald Trump and Kevin Warsh have revived concerns about central-bank independence. "The combination of weak data and political noise is hard for the dollar to absorb," a London-based macro hedge fund manager said.
Geopolitical risk offered some support. Iran announced it is ready to negotiate with Oman on reopening the Strait of Hormuz, but set conditions – lifting sanctions, withdrawing US troops, and reparations – that Washington is unlikely to accept. The risk of escalation kept a floor under the dollar as a safe-haven asset, several currency strategists said.
USD/JPY bears tested the downside after the jobs print, pushing the pair below ¥157. Speculators quickly stepped in, leaning on the wide interest-rate differential between the Fed and the Bank of Japan. The dollar rebounded above ¥158 within the session and held there through the close. "The carry trade dynamic is intact," a Tokyo-based FX dealer said. "A weak US number doesn't change the fact that you're borrowing at near zero to lend at 5%."
Gold surged past $4,300 and consolidated above the level, its highest since the metal's record run in April. The combination of a weaker dollar, falling US Treasury yields, and reduced tightening odds gave bullion its strongest one-day rally in three months. When inflation runs hot and the Fed is unwilling to tighten, gold tends to rise, a London precious-metals analyst noted.
The next scheduled data point is the July CPI print on Aug. 13.
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