Investing.com – The dollar slipped to a seven-month low, after data showed the pace of U.S. job growth in April unexpectedly fell, causing a shift in sentiment towards safe havens as investors questioned the prospect of stronger U.S. economic growth in the second quarter.
The U.S. dollar index, which measures the greenback’s strength against a trade-weighted basket of six major currencies, rose by 0.49% to 96.68.
The U.S. economy added 138,000 jobs in May, well below forecasts of 185,000 new jobs while the unemployment rate fell to a 16-year low of 4.3%, the Labor Department said on Friday.
The soft headline jobs number did little to derail expectations that the Federal Reserve (Fed) would hike its benchmark rate in June, as the majority of traders, more than 80%, continued to support the view that the Fed will hike rates at its next meeting on June 13-14.
“We know the Fed is more than happy to look through this kind of thing,” Saxo Bank head FX Strategy John Hardy said on Friday.
Despite elevated expectations of a June rate hike, the dollar has fallen to its lowest level since President Donald Trump was elected last November, while the U.S. 10-Year remained on track to post its fourth straight weekly loss, as investors questioned whether the soft jobs report may be a precursor to a slowdown in the U.S. economy.
The euro and yen, were the main beneficiaries of the slump in the dollar while the pound bounced off session lows.
EUR/USD rose 0.54% to $1.1273 while EUR/GBP added 0.51% to 0.8748.
USD/JPY fell to Y110.44, down 0.84%, while USD/CAD lost 0.21% to trade at $1.3488.
GBP/USD pared losses, rising to $1.2887, up 0.02%, as the race for No 10 tightened, after polls indicated that that Theresa May’s Conservative party holds only a slender lead over the Labour party, ahead of the election vote on June 8.