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Why the 57k Payrolls Miss Puts a September Fed Cut in Play
June payrolls cratered to 57,000, far below the 190,000 consensus, sending the dollar to a three-week low. Markets now price a 70% chance of a September Fed cut. The next catalyst is the July 11 CPI report.
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U.S. payrolls added just 57,000 jobs in June, the smallest gain in over three years and a sharp miss against the 190,000 consensus. The dollar fell broadly after the release. The DXY slipped to a three-week low. Treasury yields dropped after the data, a move that reflected a repricing of rate-cut odds, traders said.
Fawad Razaqzada, market analyst at FOREX.com, said the data shifts the balance toward earlier easing. "The labor market is cooling faster than the Fed expected, and that shifts the balance toward an earlier easing cycle," he said. Markets now see a 70% chance of a September cut, up from 50% before the release.
The dollar-yen slid to 157.80, its lowest in three weeks. The speed of the move revived speculation that Japanese authorities had stepped in to support the yen. No confirmation came from the Ministry of Finance. Some traders said the pace was consistent with prior intervention episodes. Others noted that thin liquidity ahead of the long weekend amplified the dollar's decline.
The euro rose to $1.0880, its highest in four weeks. Sterling climbed past $1.2900 for the first time since March. Gold added 1.5% to $2,360 an ounce. Real yields fell. The Australian dollar touched $0.6780.