United States Dollar Index set for negative weekly close after weak jobs data

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The US Dollar underperforms its major currency peers as traders reconsider hawkish Federal Reserve (Fed) interest rate expectations, following the release of the weak United States (US) Nonfarm Payrolls (NFP) data for June on Thursday.

The US Dollar Index looks set for a negative weekly close as soft US job data weighs on hawkish Fed bets.
The Fed is still expected to deliver at least one interest rate hike this year.
Analysts at ING see little pain ahead for the US Dollar despite the recent NFP-induced decline.

At press time, the US Dollar Index (DXY), which gauges the Greenback’s value against six major currencies, trades 0.13% lower to near 100.70. The USD Index is down 0.66% from its last week’s closing price of 101.37.

US Dollar Price This week

The table below shows the percentage change of US Dollar (USD) against listed major currencies this week. US Dollar was the weakest against the British Pound.

	USD	EUR	GBP	JPY	CAD	AUD	NZD	CHF
USD		-0.54%	-1.12%	-0.39%	-0.01%	-0.70%	-1.12%	-0.89%
EUR	0.54%		-0.64%	0.15%	0.49%	-0.18%	-0.64%	-0.41%
GBP	1.12%	0.64%		0.82%	1.14%	0.45%	-0.00%	0.23%
JPY	0.39%	-0.15%	-0.82%		0.36%	-0.33%	-0.65%	-0.54%
CAD	0.00%	-0.49%	-1.14%	-0.36%		-0.69%	-1.01%	-0.81%
AUD	0.70%	0.18%	-0.45%	0.33%	0.69%		-0.45%	-0.21%
NZD	1.12%	0.64%	0.00%	0.65%	1.01%	0.45%		0.21%
CHF	0.89%	0.41%	-0.23%	0.54%	0.81%	0.21%	-0.21%

The heat map shows percentage changes of major currencies against each other. The base currency is picked from the left column, while the quote currency is picked from the top row. For example, if you pick the US Dollar from the left column and move along the horizontal line to the Japanese Yen, the percentage change displayed in the box will represent USD (base)/JPY (quote).

The odds of the Fed delivering at least one interest rate hike by the end of the September policy meeting have diminished to 53.2% from almost 64% seen on Wednesday, the CME FedWatch tool shows.

The US NFP report showed on Thursday that the number of payrolls increased were lower than expected. The NFP data arrived at 57K, significantly lower than estimates of 110K. Also, the May data was revised lower to 129K from 172K.

Meanwhile, investors seek fresh cues regarding whether the pain the US Dollar will continue next week.

Analysts at ING said, “The dollar is unlikely to enter a sustained downward trend after Thursday's worse-than-expected US NFP report. The data aren't weak enough on their own to trigger a significant repricing in rate rise bets for the Federal Reserve, he says. While markets scaled back the prospect of imminent tightening, there is still more than 25 basis points (bps) priced in by December. The institution expects the DXY to stabilize in a range of 100.0-101.500 in coming weeks.

Next week, major triggers for the US Dollar will be the US ISM Services Purchasing Managers’ Index (PMI) data for June and Federal Open Market Committee (FOMC) minutes for the June policy meeting.