What Happens To The USD After Being Disappointed With The NFP?

 Readings of the U.S. NFP jobs report continued to add to the wounds for U.S. dollar trading causing it to continue to trade lower against major rivals earlier in the week.

The U.S. economy only added 235,000 jobs in August, much weaker than expectations of a 720,000 rise by the market and a sharp decline from the previous reading of 943,000.

According to analysts, this reduction is due to the resurgence of Covid-19 infection which has burdened demand from the hospitality sector and layoffs of hiring by employers. Meanwhile, the unemployment rate was in line with expectations to decline to 5.2% from 5.4% last month.

As a result, these weak figures continue to add pressure to the market and shake the view that the Federal Reserve (Fed) will announce a cut in the near future.

The U.S. central bank has previously placed a recovery in employment as a condition for them to withdraw coronavirus stimuli.

In the Asian session, the dollar index, which measures the strength of the greenback against six major currencies, rose slightly to 92.15, having plunged to 91.94 for the first time since early August as soon as the NFP data was published.

The euro traded little changed at 1.1878 after soaring to its highest level since late June at 1.1909 at the end of last week. In addition to the weak USD, the currency was also supported by expectations for the European Central Bank (ECB) to cut bond purchases at a policy meeting this week.

The pound also benefited from the weakness of the greenback by rising to a 2 -week high of 1.3890, before returning to a slight gain in the Asian session, 1.38580.

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