US dollar gains in consolidation move after Fed turmoil, Trump's shake-up
Those developments battered the currency and prompted investors to ramp up bets of imminent Fed rate cuts.
But the dollar's bounce on Monday could be short-lived, analysts said, and the broader downtrend could re-emerge given U.S. policymaking uncertainty and a U.S. economy that is finally showing cracks.
Data on Friday showed U.S. employment growth undershot expectations in July while the nonfarm payrolls count for the prior two months was revised down by a massive 258,000 jobs, suggesting a sharp deterioration in labour market conditions.
"The U.S. seems to be ... experiencing a slowdown across industries that are doubting the benefits to arrive from deterring overseas production and purchasing," said Juan Perez, director of trading at Monex USA in Washington.
"The world is not necessarily experiencing much optimism even as economic indicators here help in suggesting that aid will come from the Fed via rate cuts," he added.
In afternoon trading, the dollar rose against the euro, Swiss franc, and the commodity-linked currencies such as the Australian and New Zealand dollars.
The euro dipped 0.1% against the U.S. unit to $1.1576 , while the dollar rose 0.5% against the Swiss franc to $0.8078 .
The drop in the Swiss currency was not a surprise after Trump hit Switzerland with some of the highest tariffs as part of the White House's global trade reset.
The Aussie and New Zealand dollars also declined on Monday versus the greenback, falling 0.2% to US$0.6463 and down 0.3% at US$0.5904 .
Against the Swiss franc, the dollar rose 0.5% at 0.8081 . Versus the yen, the U.S. currency gained 0.3% to 146.945 .
"July's rebound in the dollar ran into a wall last week, but so far there's no sign of a big jump in any risk premium for holding U.S. assets," said Karl Schamotta, chief market strategist, at Corpay in Toronto.
"Strong corporate earnings are - so far - managing to overshadow fears of an incipient slowdown in labor markets, the impact of higher tariffs, the threat to the independence of U.S. statistical agencies, and the growing likelihood that the next Fed chair tries to lead monetary policy in an inflation-boosting dovish direction," he said.
In other developments, Trump fired BLS Commissioner Erika McEntarfer on Friday, accusing her of faking the jobs numbers.
An unexpected resignation by Fed Governor Adriana Kugler also opened the door for Trump to make an imprint on the central bank much earlier than anticipated. Trump has been at loggerheads with the Fed for not lowering interest rates sooner.
The developments sent the dollar down more than 2% against the yen and roughly 1.5% against the euro on Friday.
The euro slipped 0.2% on Monday to $1.1568 , while sterling was little changed at $1.3275.
Trump said on Sunday he will announce a candidate to fill the open position at the Fed and a new BLS head in the next few days.
Against a basket of currencies, the dollar edged up 0.1% to 98.77, after sliding more than 1.3% on Friday.
The dollar rose 3.4% in July, its biggest monthly gain since a 5% jump in April 2022 and first monthly rise of the year, as markets became more at ease with Trump's trade policy and economic data had remained resilient in the face of tariffs.
In other markets, the policy-sensitive two-year Treasury yield fell to a three-month low of 3.659% on Monday as traders heavily raided bets of a Fed cut in September, while the benchmark 10-year yield strayed not too far from a one-month low at 4.2257%.
Markets are now pricing an 84% chance the Fed will ease rates by a quarter-point next month owing to the weaker than expected jobs data, according to CME's FedWatch, with just under 60 basis points worth of cuts expected by December, implying two 25 basis point cuts and a 40% chance of a third.
Hashtags
Try Our AI Features
Explore what Daily8 AI can do for you:
Comments
No comments yet...
Related Articles
Daily Mail
4 minutes ago
- Daily Mail
Report: Claire's inches closer to bankruptcy after missing rent
Another mall icon slips toward bankruptcy as missed rent payments and debt pile up. Claire's — the suburban Chicago-born chain that helped generations of tweens pierce their ears and make friendship bracelets — is reportedly racking up millions in debt. Founded in 1961, the retailer became a mall mainstay thanks to its ear piercings, glittery jewelry, and shelves stacked with trend-chasing trinkets for tween and teen girls. Claire's missed rent on some stores in June and July, according to Bloomberg , and has been hunting for a buyer since late June . It's also staring down nearly $500 million in loans due by the end of 2026. In May, the chain reportedly skipped interest payments to conserve cash — a classic sign of distress. A restructuring team is now steering operations behind the scenes. A source told Daily Mail that stores will stay open during the negotiations. But missed rent payments may foreshadow store closures — and potentially the end of one of America's last chains dedicated solely to young girls and early teens. A representative for Claire's didn't immediately respond to request for comment. Claire's stores are often a rite of passage for middle school-aged kids, featuring a vast array of glittery plastic earrings, necklaces, rings, keychains, and hats. The cheap, glitzy fashions often have price tags under $10. But that accessibility comes at a cost: Claire's has long relied on inexpensive imports from China to keep prices low. Products produced in China are currently facing a 30 percent tariff as part of President Donald Trump's signature economic policy. They could be subject to even higher import fees, depending on current negotiations between US and Chinese officials. A pause on larger tariffs for Chinese-produced goods is set to end in mid-August. Meanwhile, inflation-strained consumers have rapidly cut back on their retail spending , casting doubt on Claire's future outlook. Claire's said it pulled in about $1.3 billion in sales last year from its global stores, according to documents seen by Bloomberg. The company generates the bulk of its revenue — roughly $720 million — from its North American stores. Claire's has faced steeper financial struggles in the past. The company declared bankruptcy in 2018 after it was unable to repay its loans. It exited bankruptcy seven months later after wiping close to $1.9 billion from its balance sheet. Mall Fall
The Guardian
4 minutes ago
- The Guardian
Tesla shareholders sue Elon Musk for allegedly hyping up faltering Robotaxi
Tesla shareholders sued Elon Musk and the electric vehicle maker for allegedly concealing the significant risk posed by company's self-driving vehicles. The proposed class-action suit, which accuses Musk and Tesla of securities fraud, was filed on Monday night. Tesla conducted its first public test of its self-driving taxis in late June near the company's headquarters in Austin, Texas. That test showed the vehicles speeding, braking suddenly, driving over a curb, entering the wrong lane and dropping off passengers in the middle of multilane roads. The National Highway Transit Safety Administration (NHTSA), the main transportation regulator in the US, is investigating the Robotaxi's pilot. Shareholders accused Musk and his electric vehicle maker of repeatedly overstating the effectiveness of and prospects for their autonomous driving technology, inflating Tesla's financial prospects and stock price. Tesla's share price fell 6.1% over two trading days after the test began, wiping out about $68bn of market value. Shareholders said this included Musk's assurance on a 22 April conference call that Tesla was 'laser-focused on bringing Robotaxi to Austin in June' and Tesla's claim the same day that its approach to autonomous driving would deliver 'scalable and safe deployment across diverse geographies and use cases'. Sign up to TechScape A weekly dive in to how technology is shaping our lives after newsletter promotion Tesla did not immediately respond on Tuesday to requests for comment. The company's chief financial officer, Vaibhav Taneja, and his predecessor Zachary Kirkhorn are also defendants. Expanding Robotaxis is crucial for Tesla as the company faces falling demand for its ageing electric vehicles and a backlash over Musk's politics. Musk, the world's richest person, says he will offer the service to half of the US population by year's end, but first he must convince regulators and assure the public his technology is safe. He claims the company has expanded its Robotaxi service to the San Francisco Bay Area, where it was previously headquartered, though regulations there prevent Tesla from offering paid autonomous rides without a renewed permit, according to the department of motor vehicles. A Florida jury on 1 August found Tesla 33% responsible for a 2019 crash involving its self-driving software, which killed a 22-year-old woman and injured her boyfriend, and ordered it to pay about $243m in damages to victims. Tesla blamed the driver and plans to appeal.
Reuters
4 minutes ago
- Reuters
CFTC seeks to allow spot crypto trading on registered exchanges
Aug 5 (Reuters) - The U.S. Commodity Futures Trading Commission (CFTC) said on Monday it would launch an initiative to allow for trading of spot crypto asset contracts listed on a futures exchange registered with the agency. While not final, the move is another by the Trump administration to integrate digital assets more deeply into traditional finance, and could pave the way for wider adoption of crypto assets. The CFTC, which regulates U.S. derivatives markets, will enable immediate trading of digital assets at the federal level in coordination with the Securities and Exchange Commission's Project Crypto initiative, CFTC Acting Chair Caroline Pham said. The CFTC invited, opens new tab stakeholders to comment on how to list the spot crypto asset contracts in a designated market. This brings crypto one step closer to the structure and standards of traditional markets, said Saad Ahmed, head of Asia Pacific at Gemini, noting that it could drive broader use by institutions and sophisticated market participants globally. The digital assets industry has made advances this year under U.S. President Donald Trump, with bills like the GENIUS Act and CLARITY Act designed to provide new, tailored rules it has long pushed for. The CFTC's latest move is another sign to crypto participants that regulators are intent on making infrastructure changes. Shortly after taking office in January, Trump ordered the creation of a crypto working group tasked with proposing new regulations, making good on his campaign promise to overhaul U.S. crypto policy. Last week, the Trump administration's working group released a landmark report in which the White House called on the U.S. securities regulator to create new rules specific to digital assets. The report also encouraged the CFTC to use its existing authority to "immediately enable the trading of digital assets at the federal level." Trump courted cash from the crypto sector on the campaign trail, calling himself the "crypto president." Industry executives spent hundreds of millions of dollars supporting Trump and other Republican congressional candidates in last year's elections. SEC Chair Paul Atkins last week outlined several pro-crypto initiatives, including directing staff to develop guidelines to determine when a crypto token qualifies as a security, and proposals for various disclosures and exemptions. The two regulators' approach marks a significant victory for the crypto industry, which has long advocated for tailored regulations. It also may be seen as a win by exchanges. So far, crypto trading platforms have been major players in spot trading, taking advantage of the regulatory gray area. "The hope continues to be that a broader range of assets beyond bitcoin and ethereum entrench themselves on U.S. venues over the next 24 months, and moves like this ultimately help along that process," said Joseph Edwards, head of research at Enigma Securities. One key to the success of Trump's crypto initiatives will be the ability of the CFTC and SEC to resolve long-standing questions such as whether digital assets are commodities or securities, industry sources said. Neither the CFTC nor the SEC immediately responded to requests seeking further comment. Trump's embrace of digital assets is in stark contrast to former U.S. President Joe Biden's regulators, who cracked down on the industry to prevent fraud and money laundering. The Biden administration sued exchanges Coinbase (COIN.O), opens new tab, Binance and dozens more, alleging they were flouting U.S. laws. Trump's SEC has dropped those cases.
