The USD is struggling on multiple fronts – DBS

Today, a disappointing US monthly jobs report could push the Dollar Index (DXY) below 105, DBS Senior FX Strategist Philip Wee notes.

DXY falls towards and below 105

“DXY fell towards 105 in the past two days after failing thrice to break above 106 over five sessions.”

“The Federal Reserve (Fed) played down May’s stronger-than-expected nonfarm payrolls of 272k vs. 165k in April. Instead, it paid more attention to the Beveridge curve, i.e., rising job vacancies lifting May’s unemployment rate to the 4% it projected for 4Q24. Fed Chair Jerome Powell said the Fed was ready to respond if US jobs weakened unexpectedly.”

“Hence, a continued rise in unemployment above 4% in June is significant, especially if average weekly earnings growth declines below 4% YoY for the first time in three years. Consensus expects NFP to drop below 200k to 190k.”