US dollar stagnates in choppy trade after payrolls beat expectations

NEW YORK, July 8 (Reuters) – The U.S. dollar was little changed against a basket of currencies on Friday ahead of the weekend after a choppy session that saw the greenback post both gains and losses after the Data showed the world’s largest economy added more jobs than expected in June.

The report cemented expectations of another 75 basis point hike at the Federal Reserve’s policy meeting later this month.

Nonfarm payrolls in the United States increased by 372,000 jobs last month, the Labor Department reported on Friday. Economists polled by Reuters had forecast 268,000 more jobs last month. Read more

Earlier in the session, the greenback hit a new two-decade high against a basket of currencies, led by gains against the euro as signs indicate the eurozone economy will tip into recession. The dollar hit back-to-back 20-year highs this week, gaining in five of the past six weeks.

In afternoon trading, the dollar index was last flat at 106.96.

Fed funds futures are pricing in more than a 90% chance of a 75 basis point rate hike this month, with about 187 basis points of cumulative tightening by the end of the year. That was up from 181 basis points Thursday night.

“Strong U.S. data, in particular a stronger-than-expected payroll today, and continued hawkish rhetoric from FOMC (Federal Open Market Committee) officials have reinforced the growing divergence between the increasingly bleak outlook in Europe and a more resilient US economy,” Jonas Goltermann wrote. , Senior Markets Economist, at Capital Economics.

That said, some economists pointed out that a closer look at the jobs report showed it wasn’t as strong as the headline suggested.

Bernard Baumohl, chief global economist, at The Economic Outlook Group, said in a report that the data reveals “an economy that is already transitioning to slower growth.”

He said he saw new signs that employers became more cautious in June, hiring 30% fewer workers in the second quarter than in the first three months of the year and down more than 10% from in the same spring term a year ago.

“And if you look at the rolling three-month payroll total, the period ending in June was the slowest since February 2021. Will the Fed take that into account?”

With jobs gone, investors are now focused on Wednesday’s inflation report.

Economists expect the year-on-year consumer price index to hit a new 40-year high of 8.8% in June, according to a Reuters poll. The monthly benchmark, however, should slide to 5.8% from 6.0% in May.

The euro was also on investors’ radars. The currency was down about 3% against the dollar this week as investors worried about the economic impact of an energy crisis caused by uncertainty in gas supplies from Russia. The euro was last up 0.1% at $1.0176. Read more

Against the yen, the dollar gained 0.1% to 136.07 yen.

Safe-haven demand briefly boosted the yen on Friday after former Japanese Prime Minister Shinzo Abe was shot dead while campaigning for a legislative election. Abe, Japan’s longest-serving leader, died later Friday. Read more .

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Bid rates for currencies at 3:40 p.m. (1940 GMT)

Reporting by Gertrude Chavez-Dreyfuss in New York; Editing by Jonathan Oatis

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