The US Dollar (USD) is under pressure as the US labour market continues to deteriorate, NBC FX analysts Stéfane Marion and Kyle Dahms note.

Weakness in the USD to be temporary

“The Greenback is under pressure as the US labour market continues to deteriorate. The unemployment rate rose to 4.3% in July, the fourth consecutive month of higher-than-expected readings, shattering the FOMC's year-end projection of 4%.”

“With Mr Powell now openly focusing on the full employment side of his dual mandate, the Fed is likely to feel comfortable easing more than previously envisaged.”

“Nevertheless, we expect the weakness in the USD to be temporary, as a slowdown in the world's largest economy reverberates through global financial markets via the risk-off trade that usually accompanies a strengthening of the greenback.”