Greenback drops as weak US jobs data pushes out Fed hike expectations

The U.S. dollar declined against major currencies on Friday following unexpectedly weak July employment data. The Labor Department reported that the economy shed 23,000 jobs in July, lower than the 80,000 jobs increase economists anticipated. The unemployment rate dropped to 4.1 percent due to a near five-year low in labor participation.

The greenback weakened against the yen, falling from a recent 13-week low of 157.56 yen to 0.57 percent. Against the euro, the dollar rose 0.39 percent. Markets now believe there is a 56 percent chance the Federal Reserve will hold off on raising interest rates in September, up from 45 percent the previous day. This shift in expectations could prompt the Fed to delay hikes until October or December, according to analysts.

U.S. Treasury yields fell, with the two-year note yield dropping 4.2 basis points to 4.245 percent and the 10-year note yield falling 2 basis points to 4.649 percent. The dollar index, which tracks the greenback's strength relative to a basket of currencies, fell 0.44 percent to 99.50, marking a second week of declines. Meanwhile, gold surged as the dollar weakened, gaining 2.6 percent to $4,347.29 per ounce.