On Tuesday, September 9, the US dollar experienced sharp fluctuations against a basket of currencies. The early session saw the dollar index (DXY) dropping to a near seven-week low at 97.259, following the release of weak US employment data last Friday. However, it rebounded later due to investors adjusting their positions and strong performance in US Treasury bond auctions, closing up 0.31% at 97.75.
Last Friday’s non-farm payrolls report showed a mere 22,000 job additions in August, far below economists’ expectations of 75,000 to 80,000 jobs. Additionally, revised data for June revealed a net loss of 13,000 jobs, marking the first negative growth since December 2020.
This heightened market expectations of an upcoming rate cut by the Federal Reserve on September 17. US interest rate futures on Tuesday afternoon indicated a 92% probability of a 25 basis point rate cut this month, with an 8% chance of a 50 basis point cut.
Furthermore, data released by the US Bureau of Labor Statistics (BLS) on Monday showed downward revisions of 911,000 jobs between April 2024 and March 2025, resulting in an average monthly decrease of around 76,000 jobs.
Final data is expected to be released in February 2026, potentially leading to further revisions of the preliminary figures.
Before the data release, several economists predicted a downward revision of approximately 800,000 annual non-farm payrolls data up to March. US Treasury Secretary Bessent also warned of a potential downward revision of up to 800,000 jobs, but the data released on Tuesday exceeded market expectations.
Despite the initial drop due to weak employment data, the US dollar reversed its decline in afternoon trading session, rising against most currencies except the Japanese yen.
The euro fell by 0.5% against the US dollar to 1.1711 USD; the US dollar rose by 0.5% against the Swiss franc to 0.7971 CHF; the pound dropped by 0.2% to 1.3527 USD; and commodity-related currencies like the Australian dollar, New Zealand dollar, and Canadian dollar all declined against the US dollar.
Analysts noted that the strong performance of the US three-year Treasury bond auction that day, setting a record for end-user demand, partially offset the weak performance of the auction in August, contributing to the dollar rebound.
Reuters quoted Elias Haddad, senior market strategist at Brown Brothers Harriman, who pointed out that the recent Fed policy leaning towards rate cuts would weaken the attractiveness of the US dollar, leading to further depreciation.
Haddad mentioned that the Fed is currently more concerned about a weak job market rather than inflation, indicating that “any rebound in the dollar is not sustainable, and is expected to reach new cyclical lows.”
This week, investors are closely monitoring the upcoming US inflation data. The Producer Price Index (PPI) on Wednesday, September 10, and the Consumer Price Index (CPI) on Thursday, September 11, will be the focus to assess the impact of tariffs on the prices in the world’s largest economy.
Meanwhile, recent data shows that the Eurozone inflation rate is nearing the 2% target, with unemployment at historical lows. The Eurozone’s attention will shift to Thursday’s European Central Bank (ECB) policy meeting, with markets widely expecting the ECB to maintain its interest rates unchanged.