The US dollar staged a broad recovery on Friday after official jobs data showed the American economy added far more positions than economists had expected in April, easing fears about a labour market slowdown and pushing back expectations for Federal Reserve rate cuts.
Payrolls Data Breakdown
The Bureau of Labor Statistics (BLS) reported that non-farm payrolls rose by 255,000 in April, significantly above the consensus forecast of 185,000. The unemployment rate held steady at 3.9%, while average hourly earnings increased 0.3% month-on-month and 4.1% year-on-year.
The DXY index jumped 0.7% to 105.20 following the release. EUR/USD fell 0.5% to 1.0750, GBP/USD dropped 0.4% to 1.2630, and USD/JPY surged 0.8% to 151.20.
Fed Rate Cut Timeline Pushed Back
Traders immediately revised their expectations for Fed policy following the data, with June rate cut probability falling from 25% to just 8%. Markets now price the first full 25bp cut in September at the earliest.
“This is a blow for anyone positioned for near-term Fed cuts. The labour market is simply too strong for the Fed to justify easing policy anytime soon.” โ Chief US Economist
The strong payrolls print reinforces the “higher for longer” narrative that has dominated currency markets this year and suggests the dollar may extend its recent gains.