The US dollar is falling against a few major currency rivals to close out the trading week, driven by a lower-than-expected jobs report in August. The disappointing labor numbers are likely enough to give the Federal Reserve the evidence it needs to pull the trigger on a second cut to interest rates later this month. But it could spell bad news for the greenbackâs strength, something that the administration is hoping for.
According to the Bureau of Labor Statistics (BLS), the US economy added 130,000 jobs last month and the unemployment rate held steady at 3.7%. The job creation was lower than what the market had forecast of 151,000 and below the 159,000 in July.
The biggest jobs gains were found in professional and business services (37,000), government (28,000), healthcare (24,000), and finance (15,000). The manufacturing sector added just 3,000 new positions.
The federal government also revised its jobs numbers for June and July. The BLS said that the economy created 159,000 jobs in July, down from 164,000, and 178,000 jobs in June, down from 193,000.
Also in the report, the average wages paid to Americans climbed 11 cents, or 0.4%, to $28.11 per hour. The 12-month average hourly earnings are up 3.2%, down from 3.3% in July. The average weekly hours edged up 0.1 to 34.4 hours and the labor force participation rate jumped 0.2% to 63.2%.
Financial markets believe it is almost certain that the US central bank will cut interest rates by at least a quarter-point. Analysts note that the Fed will inevitably take action on the signals of distress in order to prevent a severe economic slowdown. If the Federal Open Market Committee (FOMC) does agree to a rate cut, then the key target range would fall to 1.75% to 2.00%.
The US Dollar Index slumped 0.16% to 98.26, from an opening of 98.42.
The USD/CAD currency pair fell 0.33% to 1.3186, from an opening of 1.3228, at 13:37 GMT on Friday. The GBP/USD slipped 0.11% to 1.2318, from an opening of 1.2332.
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