Dollar tumbled sharply in early New York trading Friday after much weaker-than-expected non-farm payrolls report. 10-year Treasury yield plunging through the 4.1% level while Gold also surged to fresh record high.
Traders moved swiftly to reprice Fed expectations, with a 25bps cut this month fully baked in and fresh speculation that policymakers may opt for a larger 50bps move. Looking ahead, odds of another 25bps cut in October spiked above 75%, underscoring market conviction that the central bank will need to move aggressively to shield the labor market.
That places next week’s CPI report in sharp focus. Should inflation show further signs of easing, it would open the door for the Fed to accelerate its easing cycle.
In weekly performance terms, Canadian Dollar is faring worst after its own dismal jobs data, while Yen remains under pressure but may recover some ground. Dollar is sliding toward the bottom of the performance table, likely to surpass Yen before the week closes. Euro leads gains, followed by the Aussie and Sterling, with Swiss Franc and Kiwi holding mid-pack.
CLEAR USD AND CAD WEAKNESS SO EVERYONE KNOW WHAT WE SHOULD DO
BANK REPORTS
Crédit Agricole warns that the 8 September French confidence vote is a pivotal event for the euro, with high odds of scenarios that could amplify political and fiscal uncertainty. Their analysis suggests EUR/USD risks are tilted lower, and markets may not be pricing in the full extent of potential volatility.
BofA sees the USD still modestly overvalued, but the drivers of further weakness are shifting away from valuation and more toward structural issues—stagflationary risks, Fed policy easing, and institutional credibility. The medium-term picture still points to gradual USD depreciation across G10.