US dollar gains in consolidation move after Fed turmoil, Trump's shake-up
Those developments battered the currency and prompted investors to ramp up bets of imminent Fed rate cuts.
But the dollar's bounce on Monday could be short-lived, analysts said, and the broader downtrend could re-emerge given U.S. policymaking uncertainty and a U.S. economy that is finally showing cracks.
Data on Friday showed U.S. employment growth undershot expectations in July while the nonfarm payrolls count for the prior two months was revised down by a massive 258,000 jobs, suggesting a sharp deterioration in labour market conditions.
"The U.S. seems to be ... experiencing a slowdown across industries that are doubting the benefits to arrive from deterring overseas production and purchasing," said Juan Perez, director of trading at Monex USA in Washington.
"The world is not necessarily experiencing much optimism even as economic indicators here help in suggesting that aid will come from the Fed via rate cuts," he added.
In afternoon trading, the dollar rose against the euro, Swiss franc, and the commodity-linked currencies such as the Australian and New Zealand dollars.
The euro dipped 0.1% against the U.S. unit to $1.1576 , while the dollar rose 0.5% against the Swiss franc to $0.8078 .
The drop in the Swiss currency was not a surprise after Trump hit Switzerland with some of the highest tariffs as part of the White House's global trade reset.
The Aussie and New Zealand dollars also declined on Monday versus the greenback, falling 0.2% to US$0.6463 and down 0.3% at US$0.5904 .
Against the Swiss franc, the dollar rose 0.5% at 0.8081 . Versus the yen, the U.S. currency gained 0.3% to 146.945 .
"July's rebound in the dollar ran into a wall last week, but so far there's no sign of a big jump in any risk premium for holding U.S. assets," said Karl Schamotta, chief market strategist, at Corpay in Toronto.
"Strong corporate earnings are - so far - managing to overshadow fears of an incipient slowdown in labor markets, the impact of higher tariffs, the threat to the independence of U.S. statistical agencies, and the growing likelihood that the next Fed chair tries to lead monetary policy in an inflation-boosting dovish direction," he said.
In other developments, Trump fired BLS Commissioner Erika McEntarfer on Friday, accusing her of faking the jobs numbers.
An unexpected resignation by Fed Governor Adriana Kugler also opened the door for Trump to make an imprint on the central bank much earlier than anticipated. Trump has been at loggerheads with the Fed for not lowering interest rates sooner.
The developments sent the dollar down more than 2% against the yen and roughly 1.5% against the euro on Friday.
The euro slipped 0.2% on Monday to $1.1568 , while sterling was little changed at $1.3275.
Trump said on Sunday he will announce a candidate to fill the open position at the Fed and a new BLS head in the next few days.
Against a basket of currencies, the dollar edged up 0.1% to 98.77, after sliding more than 1.3% on Friday.
The dollar rose 3.4% in July, its biggest monthly gain since a 5% jump in April 2022 and first monthly rise of the year, as markets became more at ease with Trump's trade policy and economic data had remained resilient in the face of tariffs.
In other markets, the policy-sensitive two-year Treasury yield fell to a three-month low of 3.659% on Monday as traders heavily raided bets of a Fed cut in September, while the benchmark 10-year yield strayed not too far from a one-month low at 4.2257%.
Markets are now pricing an 84% chance the Fed will ease rates by a quarter-point next month owing to the weaker than expected jobs data, according to CME's FedWatch, with just under 60 basis points worth of cuts expected by December, implying two 25 basis point cuts and a 40% chance of a third.
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But its shipments have been falling this year, according to a Bloomberg analysis of ship-tracking data. Increased energy prices "The key channel by which secondary tariffs on buyers of Russian energy could impact the global economy would be through the level of energy prices," says Kieran Tompkins from the consultancy Capital the tariffs work, they will cut the flow of Russian oil and gas to global with less supply, prices could go up, just as they did when Russia launched its full-scale invasion of Ukraine in 2022. That led to a spike in inflation around the world. President Trump says he isn't worried because of record US oil Tompkins points out that, this time, there are also other reasons to suggest the impact on prices would not be as marked. 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