US Dollar drops against Euro, Yen amid strong jobs report

The US dollar experienced a decline on Friday, but managed to recover some losses against the euro and yen after a stronger-than-expected jobs report revealed that the US economy had added more new jobs than anticipated last month.

The data, which showed nonfarm payrolls rising by 177,000 jobs in April, reinforced expectations that the Federal Reserve is likely to maintain interest rates at current levels for the upcoming meetings, with no rate cuts expected until at least the summer.

March’s job gains were also revised upward to 185,000, although economists had predicted only 130,000 jobs added in April, after a previously reported 228,000 increase in March.

Despite the positive jobs data, economists caution that the report does not fully reflect the impact of the tariffs imposed on Liberation Day (April 2). Many anticipate a slowdown in job growth, or even contraction, in the coming months as the full effects of the tariffs come into play.

Jeff Schulze, head of economic and market strategy at ClearBridge Investments, noted that the jobs data was collected during the week after the tariffs were implemented. “It’s too soon to expect substantial fallout from the tariffs just yet. Investors may view this as a ‘calm before the storm,’ with any strength in the data downplayed due to the known economic challenges ahead,” Schulze wrote in an emailed statement.

As a result, the US dollar trimmed its losses against the yen but remained lower on the day, trading at 144.52 yen, down by 0.6%. The euro pared its gains but still traded higher at $1.1326, up by 0.3%.

In response to the jobs data, the US rate futures market slightly reduced expectations for a rate cut by the Federal Reserve in June. The probability of a rate cut now stands at 50%, down from 60% before the report’s release. Overall, the market now anticipates a total reduction of around 85 basis points (bps), a decrease from previous expectations of 100 bps.