The US dollar dropped against its main peers from two-month highs it reached overnight, as signs of labor market weakness strengthened the case for earlier Federal Reserve rate cuts.
In spite of this, the dollar continued to rise on Friday, continuing its upward trend after last week’s unexpectedly high monthly payrolls data forced traders to abandon bets on a half-percentage-point decrease at the Fed’s upcoming policy meeting.
An increase in the consumer price index (CPI) that same day, which served as a warning that restrictive monetary policy may be necessary to manage inflation, clouded the market’s perception of Thursday’s spike in initial unemployment claims.
On November 7, the odds of a quarter-point Fed rate cut rose to 83.3%.
