Dollar steadies after US jobs rout, Swiss franc lower
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 report itself was perhaps not that weak but the revisions were extremely significant," said Mohamad Al-Saraf, FX strategist at Danske Bank.
"We have a hard time seeing how the Fed cannot lower rates at the September meeting."
Adding to headwinds for markets, Trump fired Bureau of Labor Statistics (BLS) Commissioner Erika McEntarfer the same day, 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 barrage of developments dealt a one-two punch to the dollar, which sank more than 2% against the yen and roughly 1.5% against the euro on Friday.
The greenback recovered some of its losses on Monday, last trading 0.3% higher at 147.91 yen . Still, it was down about 3 yen from its peak on Friday.
The euro fell 0.2% to $1.1561 , while sterling was little changed at $1.3276.
Trump said on Sunday he will announce a candidate to fill an open position at the Fed and a new BLS head in the next few days.
Against a basket of currencies, the dollar edged up 0.2% to 98.88, 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.
The two-year Treasury yield fell to a three-month low of 3.659% on Monday as traders heavily upped bets of a Fed cut in September, while the benchmark 10-year yield strayed not too far from a one-month low at 4.2434%.
Markets are now pricing an almost 90% chance the Fed will ease rates next month owing to the weaker-than-expected jobs data, with just under 60 basis points worth of cuts expected by December, implying two quarter-point cuts and a 40% chance of a third.
"Market reactions to Friday night's events were swift and decisive," said Tony Sycamore, a market analyst at IG. "Equities and the U.S. dollar tumbled, along with yields."
In other currencies, the dollar strengthened over 0.5% against the Swiss franc after Trump hit the country with some of the highest tariffs as part of the White House's global trade reset.
The euro rose 0.3% against the franc .
"We saw the franc weakening a lot after the announcement," Danske Bank's Al-Saraf said.
"If these tariffs were to be sustained, the relative downside for the Swiss economy will be quite big."
The Swiss cabinet will hold a special meeting later on Monday to discuss the next steps, and said it remains open to revising its offer to the United States.
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BBC News
7 minutes ago
- BBC News
How Trump's 'secondary tariffs' on Russia could hit global economy
Despite being the world's most sanctioned country, Russia has continued to use its vast energy wealth to bankroll its war in President Donald Trump is hoping to change that. He has announced that sweeping new secondary tariffs will impact any country still trading with Russia if a ceasefire with Ukraine is not agreed by Friday 8 August. Secondary tariffs would see goods from any country that trades with Russia face a 100% tax when they are imported into the and gas are Russia's biggest exports, and Moscow's biggest customers include China, India and Turkey. "I used trade for a lot of things, but it's great for settling wars", said Trump last would not be the first time the Trump administration has imposed secondary tariffs, which are also in place to punish buyers of Venezuelan using them against Russia would have far bigger implications for the global remains the world's third biggest oil producer, behind only Saudi Arabia and the US itself. But its shipments have been falling this year, according to a Bloomberg analysis of ship-tracking data. Increased energy prices "The key channel by which secondary tariffs on buyers of Russian energy could impact the global economy would be through the level of energy prices," says Kieran Tompkins from the consultancy Capital the tariffs work, they will cut the flow of Russian oil and gas to global with less supply, prices could go up, just as they did when Russia launched its full-scale invasion of Ukraine in 2022. That led to a spike in inflation around the world. President Trump says he isn't worried because of record US oil Tompkins points out that, this time, there are also other reasons to suggest the impact on prices would not be as marked. He explains that "the current backdrop is one where OPEC+ [the group of major oil producing countries and its allies] have significant spare capacity to draw upon."Russia has devised a whole system for avoiding existing sanctions, which could be useful for helping its trading partners avoid the secondary tariffs threatened by example, its so-called "shadow fleet" - consisting of hundreds of tankers with obscure ownership - could be used to conceal the origin of exported Russian oil and gas."Sanctions maintenance is as big a task as the imposition of sanctions in the first place," US sanctions expert Richard Nephew of Columbia University says. "That's because the party that is being sanctioned takes steps to evade them." Pricier iPhones from India Since the full-scale invasion of Ukraine in 2022 India has been the second biggest buyer of Russian oil, according to the Centre for Research on Energy and Clean Air. "They're fuelling the war machine. And if they're going to do that, then I'm not going to be happy," President Trump told US outlet CNBC on Tuesday. If secondary sanctions take effect, US companies buying goods from India will have to pay a 100% import tax - or tariff - when those products reach US idea is that it makes these goods so expensive that US businesses will choose to buy them cheaper from elsewhere, resulting in lost revenue for India. That, in turn, is supposed to deter India from buying Russian oil. And if Russia is left unable to sell its oil elsewhere because other countries face the same predicament, it will have less cash to finance the war in way in which Americans could experience higher prices as a result of new secondary tariffs is in their purchase of mobile phones from calls Trump's tariff threat over Russian oil 'unjustified'US firm Apple is moving much of its iPhone production to India - in particular the manufacturing of handsets that it wants to sell in the US. If these products are subject to the new tariffs, prices could double for US consumers. That is because tariffs are paid by the companies that import goods - and those companies tend to pass most, if not all, of their cost increases on to their to the US from India are already facing a 25% tariff as part of President Trump's broader trade shake-up, and he told CNBC that number could be raised "very substantially". India's government has accused the US of double standards, pointing to Washington's own continued trade with vast majority of that trade is made up of US imports from India which amounted to just over $3bn (£2.2bn) last year - although that's just 10% of 2021 levels. That trade is dominated by US purchases of raw materials for nuclear energy and fertilizers. Russia is a major global supplier of both. 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Further harm to US-EU commerce Analysis by the Finland-based Centre for Research and Clean Air shows that the EU and Turkey are also still amongst the biggest buyers of Russian 2022, the EU was the number-one export destination for Russia, although that has been vastly reduced since the full-scale invasion of Ukraine. Brussels recently agreed to buy a lot more energy from the US, but some imports from Russia remain. In June, the president of the European Commission, Ursula von der Leyen, acknowledged the problem, saying "Russia has repeatedly attempted to blackmail us by weaponizing its energy supplies" as she laid out plans to end imports by the end of US-EU trade relationship is the biggest in the world, and the pair have just negotiated new trade terms which will see a 15% tariff be applied on most EU exports to the in the EU criticised that deal, saying the tariffs would harm European exporters. Now they also fear that secondary sanctions on the EU could do even more harm. 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Reuters
7 minutes ago
- Reuters
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The Independent
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