Dollar Dips as U.S. Job Growth Slows, Unemployment Rises

The U.S. dollar index dropped slightly after data showed slower job growth in June and a rise in unemployment, suggesting the Federal Reserve might cut interest rates in September. The dollar weakened against the yen and the euro, while investments adjusted to the new economic indicators.

The U.S. dollar index experienced a minor decline on Friday following the release of data indicating marginally slower job growth in June and a rise in the unemployment rate. These indicators strengthen the possibility of the Federal Reserve initiating interest rate cuts as early as September.

Initially, the dollar index extended its declines, particularly weakening against the yen before paring some losses. As of the last report, the index was down by 0.09% at 105.07, with the euro appreciating by 0.06% to $1.0817. The dollar also saw a decrease of 0.04% against the Japanese yen at 161.29.

Nonfarm payrolls in the U.S. increased by 206,000 jobs last month, according to the Labor Department. However, the data for May was significantly revised down to show only 218,000 jobs added, compared to the previously reported 272,000. The unemployment rate edged higher to 4.1%, slightly surpassing the estimated 4.0%. "The labor market shows signs of deceleration," commented Karl Schamotta, chief market strategist at Corpay in Toronto, adding that a September rate cut by the Fed is increasingly likely.

(Disclaimer: With inputs from agencies.)