FX.co ★ Dollar Holds Decline on Soft Jobs Data

The dollar index hovered around 99.6 on Monday after a sharp decline in the previous session, pressured by weaker-than-expected US employment data that dampened expectations for an imminent Federal Reserve interest rate hike. Nonfarm payrolls unexpectedly fell by 23,000 in July, and substantial downward revisions to the prior two months further underscored a deterioration in labor market conditions. Markets now assign roughly a 44% probability to a 25 basis point rate increase in September, down from 67% a week earlier.

Investors are now focused on key inflation data due this week for further guidance on the monetary policy outlook. At the same time, markets continued to monitor developments in the Middle East, as Iran denied holding direct talks with the US despite Washington’s assertions that a deal was close. Tehran has reiterated its conditions for any agreement, including an end to the US naval blockade, the lifting of sanctions, and compensation for war-related damage.