FX.co ★ Dollar Extends Slide on Fed Rate Cut Bets

The US Dollar Index continued its decline, dropping below 99 this Monday, following the trend of last session’s losses. This movement aligns with market reactions to a tepid July employment report, which has strengthened anticipations for potential rate cuts by the Federal Reserve. In July, nonfarm payrolls increased by only 73,000, falling significantly short of predictions. Furthermore, previous months' data were downwardly revised by 258,000, indicating a more profound strain within the labor market. As a result, the market is now nearly fully anticipating a rate reduction in September, with expectations of over 63 basis points of easing by the end of the year. Additionally, the market environment was further intensified by President Donald Trump's dismissal of Erika McEntarfer, the Bureau of Labor Statistics Commissioner, on Friday, believing she manipulated employment figures. Investors are also considering the wider ramifications of President Trump’s extensive retaliatory tariffs on economic growth and inflation. Consequently, the dollar experienced further depreciation against the British pound, as well as the Australian and New Zealand dollars, while showing a slight increase against the euro and yen.