The US dollar recovered after a series of fluctuations
What’s happening:-
The US dollar recovered slightly on Monday, after recording losses last week.
What happened:-
The US dollar remained under pressure last week due to disappointing jobs data and President Donald Trump’s moves to force the Federal Reserve to cut interest rates.
Despite the pressure last week, the US dollar ended July in the black, its first monthly gain in 2025.
Why it matters:-
Data released on Friday showed weaker-than-expected job growth in July. Nonfarm payrolls rose by 73,000 in July, versus market expectations of 110,000.
The US dollar index rose 0.1% to 98.77 after falling 1.3% on Friday
The US unemployment rate edged higher to 4.2% in July, from 4.1% in the previous month, although this came in-line with market estimates.
Trump fired the Bureau of Labor Statistics commissioner Erika McEntarfer on Friday, accusing her of manipulating job figures.
Last week, the Federal Reserve had kept interest rates unchanged in the 4.25%-4.50% range. Fed Chairman Jerome Powell said that no decision had been made regarding the policy decision in September.
Trump criticised the Fed’s policy decision and called upon Powell to cut interest rates to boost the US economy.
Fed Governor Adriana Kugler surprisingly announced his resignation effective August 8, which would give the US President the chance to pick Powell’s successor earlier than projected.
This triggered speculations of the US central bank cutting rates by 25bps in September and by another quarter percentage point by yearend.
Trump also announced higher tariffs on exports from several trading partners, including Canada, India and Brazil.
The US dollar index rose
The latest developments weighed on the US dollar last week, sending the USD/JPY forex pair lower by more than 2% and the USD/EUR by 1.5% on Friday.
The US dollar gained 3.4% in July, recording its biggest monthly surge since April 2022 and its first monthly gain of 2025.
The greenback recovered on Monday, after steep declines last week. The US dollar index, which measures the greenback’s performance versus a basket of major peers, rose more than 0.1% to 98.78.
The EUR/USD forex pair fell 0.1% to 1.1574. The US dollar also recorded gains versus the Swiss franc after Trump announced some of the highest tariffs on Switzerland.
The US dollar rose
What to watch:-
Investors will continue monitoring tariff-related announcements from US President Donald Trump.
Data on balance of trade (1630 UAE Time) and ISM services PMI (1800 UAE Time) will also remain in focus. The US trade gap, which rose to $71.5 billion in May from $60.3 billion in the previous month, is expected to narrow to $61.6 billion in June. Analysts expect the ISM services PMI to surge to 51.5 in July from 50.8 in June.