FX.co ★ Jobs Data Aided Dollar's Tumble Last Week

During the week ending May 3, the Dollar faced significant losses due to a lackluster job market update, which evoked a resurgence of hopes for a U.S. Federal Reserve rate cut. The Dollar depreciated against multiple currencies, including the Euro, British Pound, Australian Dollar, and Japanese Yen. Additionally, the six-currency Dollar Index documented a steep drop.

Throughout the week of April 27 to May 3, amid fluctuating expectations of a Fed rate cut, the Dollar Index dipped by 0.95 percent. Despite the initial boost in the Index due to anxieties surrounding monetary policy, a disappointing labor market update resulted in a significant downturn, dropping to 104.52 on Friday from the week's high point of 106.49.

In line with expectations, the Federal Reserve held the interest rates steady between 5.25 and 5.5 percent on Wednesday. The Fed downplayed the likelihood of a rate hike while announcing a reduced pace of quantitative tightening from June 1. However, they acknowledged the recent underperformance in achieving the Committee's 2 percent inflation objective.

The subsequent job market update, released by the U.S. Bureau of Labor Statistics on Friday, showed a decline in hiring and earning indicators coupled with an unexpected increase in the unemployment rate. A predicted decrease in the pressure on inflation due to the cooling labor market has in turn intensified the speculation regarding a rate cut. Consequently, this has weakened the Dollar's sentiment.

The EUR/USD pair experienced a 0.66 percent rally during the week that ended May 3, amidst the Dollar's weakness. The GBP/USD pair also benefited from the resurgence in Fed rate cut speculation, gaining 0.46 percent over the same period.

The AUD/USD pair witnessed a significant surge of 1.15 percent against the Greenback mainly due to the monetary policy discrepancy between the Federal Reserve and the Reserve Bank of Australia. The Greenback's depreciation and a suspected intervention by the Japanese government contributed to the Yen's gain against the U.S. Dollar.

As the speculation of a potential Fed rate cut continues to shape the currency markets, critical upcoming events could significantly influence the market sentiment. These include the Reserve Bank of Australia's interest rate decision on Tuesday, the release of the Bank of Japan's Summary of Opinions on Wednesday, and the Bank of England's monetary policy review on Thursday.

With all these financial market movements, the Dollar Index has slid to 104.94. The EUR/USD pair is now standing stronger at 1.0785, the GBP/USD pair has increased to 1.2586, the AUD/USD pair rallies at 0.6632, and the USD/JPY pair has risen to 153.70.