THE dollar fell against major currencies including the yen and euro yesterday after data showed US employment unexpectedly declined in July, raising concerns about the economy and how the Federal Reserve may respond with interest rates.
The dollar weakened against the yen after the report, shedding gains made in recent days in the aftermath of a historic intervention last week between Japanese and US authorities, which had pushed it to a 13-week low.
It was last down 0.52 per cent to 157.62 yen.
“The big drop that we saw this morning is almost wholly related to the US employment report for July because I think no one really expected non-farm payrolls to be negative or that there would be a big downward revision in the June numbers,” said Thierry Wizman, global FX and rates strategist at Macquarie Group.
“I’m inclined to think that the market has shifted the Fed hike into October or December instead of September. That’s the main reason for the dollar’s decline. The market thinks that the Federal Reserve is going to take into account how tight the labour market is. So anytime you see a print that suggests the US economy is weak or that the labour market is not as strong as otherwise thought, they effectively push out the prospect of a Fed rate hike.”
The euro was last up 0.31pc against the dollar at $1.1559.
The dollar index, which measures the greenback against a basket of currencies including the yen and the euro, fell 0.46pc to 99.49.
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