{"id":435692,"date":"2026-08-07T20:02:23","date_gmt":"2026-08-07T13:02:23","guid":{"rendered":"https:\/\/www.swingfish.trade\/blog\/market-news\/us-dollar-sinks-on-shock-contraction-in-jobs-435692\/"},"modified":"2026-08-07T20:02:23","modified_gmt":"2026-08-07T13:02:23","slug":"us-dollar-sinks-on-shock-contraction-in-jobs","status":"publish","type":"post","link":"https:\/\/www.swingfish.trade\/blog\/market-news\/us-dollar-sinks-on-shock-contraction-in-jobs-435692\/","title":{"rendered":"US dollar sinks on shock contraction in jobs"},"content":{"rendered":"
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The US non-farm payrolls report pointed to an economy significantly worse than believed.<\/p>\n

The data <\/a>showed the economy shedding 23K jobs in July, far worse than +80K expected and below any estimates in the survey of economists. Worse yet, the prior two reports were revised lower by a combined 103K jobs dropping the three-month average to just 20K jobs.<\/p>\n

The market had been leaning towards a rate hike in September and priced in at 57% just before the data but that’s fallen to 44% afterwards. With that, the US dollar dropped across the board. USD\/JPY fell particularly hard and is now down 127 pips on the day to 157.14.<\/p>\n<\/p>\n

The US dollar also tumbled against the Canadian dollar as — at the same time as the US non-farm payrolls report — Canada’s employment report <\/a>showed 75.1K jobs compared to 15.0K expected. That pair is down 65 pips to 1.3948 and the lowest since June 15.<\/p>\n

A big beneficiary of the drop in the dollar and the recalibration of Fed rate expectations is gold. It rallied hard earlier in the week and has jumped $122 to $4360 today. The weekly chart is now showing a big bounce after months of selling.<\/p>\n<\/p>\n

Equity markets are also upbeat about the number as it lowers the chance of a rate hike. S&P 500 futures are up 41 points, roughly doubling the pre-market gain. That said, much of the focus in stock markets is on the AI\/tech trade rather than the intricacies of the economy.<\/p>\n

In the bond market, US 2-year yields are down 6.8 bps on the day to 4.17%, relieving some of the pressure on bonds and adding a bid for safety in case the econom takes a sudden drop.<\/p>\n

As for me, I’m fairly skeptical of this number. I flagged <\/a>some weakness in my non-farm payrolls preview so I’m not shocked but the numbers from ADP and ISM don’t indicate any kind of big contraction or sudden drop in US hiring. I expect this to bounce back fairly quickly but also to re-ignite the debate about what is the steady-state of ‘full’ US employment monthly gains given aging demographics and low immigration. It wasn’t long ago that some Fed officials were saying that +20K monthly jobs were good enough. We will have to see if they still believe that.<\/p>\n

For me though, the most-concerning part of the US labor force is how many people are dropping out of it, with nearly 1 million workers lost since May alone. Note the spart decline in the labor force participation rate.<\/p>\n<\/p>\n

This article was written by Adam Button at investinglive.com.<\/p><\/div>\n","protected":false},"excerpt":{"rendered":"

The US non-farm payrolls report pointed to an economy significantly worse than believed. The data showed the economy shedding 23K jobs in July, far worse than +80K expected and below any estimates…<\/p>\n","protected":false},"author":216,"featured_media":0,"comment_status":"open","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[86],"tags":[],"class_list":["post-435692","post","type-post","status-publish","format-standard","hentry","category-market-news"],"_links":{"self":[{"href":"https:\/\/www.swingfish.trade\/blog\/wp-json\/wp\/v2\/posts\/435692","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.swingfish.trade\/blog\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.swingfish.trade\/blog\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.swingfish.trade\/blog\/wp-json\/wp\/v2\/users\/216"}],"replies":[{"embeddable":true,"href":"https:\/\/www.swingfish.trade\/blog\/wp-json\/wp\/v2\/comments?post=435692"}],"version-history":[{"count":0,"href":"https:\/\/www.swingfish.trade\/blog\/wp-json\/wp\/v2\/posts\/435692\/revisions"}],"wp:attachment":[{"href":"https:\/\/www.swingfish.trade\/blog\/wp-json\/wp\/v2\/media?parent=435692"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.swingfish.trade\/blog\/wp-json\/wp\/v2\/categories?post=435692"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.swingfish.trade\/blog\/wp-json\/wp\/v2\/tags?post=435692"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}