The dollar index fell to a 7-week low and gold surged to a 7-week high after the US July payroll report showed an unexpected decline in nonfarm payrolls and weaker-than-expected wage growth, cutting the probability of a September Fed rate hike to 44% from 58%. Nonfarm payrolls unexpectedly fell by 23,000, the first decline in five months, while average hourly earnings rose just 0.1% month-over-month, below the 0.3% forecast. The euro rallied to a 7-week high, supported by better-than-expected German trade data, and the yen strengthened as Treasury yields fell. Gold prices also found support after China’s central bank added 640,000 ounces to its reserves in July, the largest increase in more than two and a half years.
Weak payrolls and wage data reduce odds of Fed rate hike, likely keeping rates lower.
Weak jobs report lowers rate hike expectations, pushing Treasury yields down.
