Investing.com – Odds for a rate hike in the next few months plummeted after the U.S. economy created much fewer jobs than expected, according to official data released on Friday.
The May employment report showed the creation of just 38,000 non-farm payrolls, far below consensus expectations for 164,000.
The reading pushed the dollar lower and sent U.S. futures into the red.
Notably, Fed fund futures slashed expectations for the next increase in interest rates.
According to the CME Group FedWatch tool, markets cut the odds of a rate hike back to 4% for June, compared to 21% before the release. The odds for a July hike tumbled to 38%, compared to the prior 58%.
In fact, the probability for tightening of monetary policy no longer crosses the 50% threshold until the November 2 meeting where it settled at 52%.
Markets will have one other key data point to gauge the strength of U.S. economy with the ISM non-manufacturing purchasing managers’ index (PMI) for May out at 14:00GMT, or 10:00AM ET.
Friday's data comes before Yellen will appear on Monday for likely the last time before the June 15 policy decision.
The Fed chief is set to give a speech on the economic outlook and monetary policy to the World Affairs Council of Philadelphia on Monday at 16:30GMT, or 12:30ET, and it could be the final chance for her to signal her position on the future path of rate hikes before the Fed announces their decision.