Dollar Extends Slide After Shock Payrolls Miss, DXY Near Seven-Week Low

The Dollar Index sits at 99.4540, down 0.30% on the last completed session (Friday, August 7 NY close). The move followed the Bureau of Labor Statistics' July nonfarm payrolls report, which showed employment fell by 23,000 against a roughly +80,000 consensus, with unemployment easing to 4.1% from 4.2%. Traders cut bets on further Fed tightening: market-implied odds of a September Fed rate hike fell to about 42% from roughly 67% a week earlier, per desk sourcing. The policy question in play remains whether the Fed hikes further, not whether it cuts, under a 3.50-3.75% target range. No new Fed communication has emerged since the payrolls print to reverse that shift.

Treasury yields eased across most of the curve in the last session: the 10-year fell 1.0bp to 4.660%, the 30-year slipped 0.2bp to 5.211%, the 5-year dropped 2.7bp to 4.362%, and the 3-month fell 2.2bp to 3.710%. The moves are modest in basis-point terms, but they sit alongside a larger repricing of Fed-hike odds after the payrolls miss. Fed's Barkin said, 'We are in a zero-to-modest gain jobs environment.' Separately, the New York Fed's survey showed one-year inflation expectations dipping to 3.6% from 3.7%. Today's calendar carries the Cleveland Fed's own inflation-expectations release, previous reading 3.7%.

EUR/USD trades at 1.1558 (+0.30%), holding near seven-week highs after Friday's payrolls-driven dollar selloff. GBP/USD sits at 1.3492 (+0.28%), cable near a multi-week high as Fed hike odds were repriced lower. USD/JPY is at 157.77 (-0.43%), with the yen firmer as the dollar sold off and short-dated Treasury yields fell. USD/CAD is at 1.3937 (-0.54%), near an eight-week CAD high after Canada's July employment rose by 75,000 against a weak US print.

USD/JPY fell 0.43% to 157.77 in the last completed session, dropping as much as 1.1% intraday to 156.68 before paring losses, as the payrolls miss hit short-dated Treasury yields and the broader dollar. The move builds on a heavier backdrop: Japan and the US carried out coordinated yen-buying intervention on July 30-31, and Finance Minister Satsuki Katayama and US Treasury Secretary Scott Bessent said afterward they 'will not hesitate' to intervene again. The Bank of Japan held its policy rate at 1.0% on July 31 by an 8-1 vote, with Hajime Takata dissenting for a hike to 1.25% and the bank flagging inflation risks that could support a September move. Today's calendar brings Japan's Economy Watchers Sentiment survey (forecast 44.6, previous 44.0) at 15:00, with Japan's markets shut for a bank holiday.

Monday's calendar is thin. Japan's Economy Watchers Sentiment survey is due at 15:00 (forecast 44.6, previous 44.0), alongside a Japanese bank holiday at 09:00. Eurozone Sentix Investor Confidence follows at 18:30 (forecast -0.7, previous -3.1). The UK's BRC Retail Sales Monitor y/y lands at 09:01 (forecast 1.5%, previous 1.7%), and Australia's NAB Business Confidence at 11:30 (previous -5). Late in the session, the Cleveland Fed's Inflation Expectations reading is due at 23:48 (previous 3.7%). No major US or eurozone data releases are scheduled for the day.