The US economy shed 23,000 jobs in July, compared with an increase of 80,000 forecast by economists polled by Reuters, Labour Department data showed. The unemployment rate declined to 4.1%, but the labour-force participation rate fell to 61.4%, its lowest level in nearly five-and-a-half years.
“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, told Reuters in an interview.
The dollar fell 0.52% to 157.62 yen after the report, reversing some of its recent recovery from a 13-week low reached following last week’s historic joint intervention by Japanese and US authorities.
The dollar index, which tracks the US currency against a host of other international ones, fell 0.% to 99.61. The euro gained 0.31% against the dollar to $1.1559.
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US Treasury yields also fell after the report. The two-year yield, which closely tracks Fed policy expectations, dropped 5.19 basis points to 4.193%, while the benchmark 10-year yield declined 2.67 basis points to 4.643%.
Traders now see a nearly 56% probability that the Fed will leave rates unchanged in September, up from 45% a day earlier, according to CME’s FedWatch tool.
Gold rallied as the dollar weakened, with spot prices climbing 2.28% to $4,336.09 an ounce.