Dollar Slips as NFP Fallout Boosts Fed Cut Bets

The U.S. dollar extended losses, with the dollar index falling to a seven-week low, as markets remained focused on last Friday’s disappointing Non-Farm Payrolls report. Despite a stronger-than-expected NFIB small business optimism survey, traders continue to price in aggressive Federal Reserve easing. CME data now shows an implied probability above 100% for a rate cut on September 17, with speculation split between a 50 basis point move or a sequence of smaller 25 basis point cuts in September, October, and December.

Dollar-Yen Reaction

USD/JPY fell after an initial spike, weighed down by speculation that the Bank of Japan could raise rates to support the yen amid ongoing political turbulence in Tokyo.

Euro-Dollar Moves

EUR/USD touched a multi-week high, though gains were capped by political instability in Europe. France’s Prime Minister Beiru lost a confidence vote, raising fresh concerns over fiscal stability and debt risks.

USD/CAD Outlook

The Canadian dollar was steadier, with USD/CAD seeing modest gains. Sentiment around CAD may improve if reports of a $20 billion acquisition of Tech Resources by Anglo-American move forward, boosting investment flows.

Global Context

Elsewhere, the ECB is expected to consider another hike in late 2026, while geopolitical tensions remain elevated after Ukraine reported new civilian casualties from a Russian airstrike, further dimming hopes for near-term peace.