The dollar index (DXY00) today retreated from a 2-month high and is down by -1.11%. The dollar tumbled today after the Jul payroll report showed the US labor market cooled more than expected, bolstering speculation the Fed may cut interest rates as soon as next month. Losses in the dollar accelerated after the Jul ISM manufacturing index contracted by the most in 9 months. The chance of a Fed rate cut at the September FOMC meeting rose to 86% from 40% before today's payroll and ISM reports were released.
The dollar initially rallied to a 2-month high today on an increase in safe-haven demand after world equity markets tumbled on concern that President Trump's tariff policies would derail the global economy. Today's weakness in stocks has also boosted some liquidity demand for the dollar.
