The dollar weakened against the Japanese yen on Friday morning to a seven-month low after US employment growth in July slowed as expected, which along with re-escalated US-Chinese trade tensions, may make a case for the Federal Reserve to cut interest rates again in September.
Non farm payrolls increased by 164,000 jobs in July, less than the month prior, and wages increased modestly, the Labour Department aid. The report came a day after President Donald Trump announced an additional 10% tariff on $300 billion worth of Chinese imports starting Sept. 1, a move that led financial markets to almost fully price in a September rate cut.
The dollar fell 0.63% against the Japanese yen last at 106.65. Versus the euro it was 0.14% weaker at $1.1099. The Swiss franc, which like the yen serves as a safe-haven investment in volatile markets, was 0.66% stronger to 0.9836 franc per dollar.
"On balance it is probably a slightly dollar-negative number because I do think that the totality of the report increases the case for a Fed rate cut in September. We're already at the point where we're trading that," said Greg Anderson, global head of foreign exchange strategy at BMO Capital Markets in New York.
The dollar subsequently rose in sympathy with US Treasury note prices, but that move had largely been retraced on Friday. The chance of a September rate cut was 93.5% on Friday morning, according to CME Group's FedWatch tool, a large jump from 56.2% a week prior.