The US dollar is in its worst losing streak in 14 years and the data aren’t helping

The bad news just keeps piling on for the dollar. The US dollar index has fallen every month since September. This is its longest losing streak in 14 years. At some point, a correction is to be expected, especially given that the economy seems to be humming along nicely. This week, data showed US GDP grew at its fastest rate in more than two years in the second quarter of 2017. Today’s jobs report could have been the day it turned around. But it didn’t: American employers added 156,000 jobs in August (pdf), missing economists’ forecasts for a 180,000 gain in payrolls. Meanwhile, the unemployment rate ticked up to 4.4%, from a 16-year low of 4.3%, and annual wage growth remained stubbornly sluggish at 2.5%. Traders reacted swiftly to the disappointment, and sent the dollar index down 0.5%, just minutes after the report was published. For 2017, the average monthly payrolls increase is 176,000, about the same as 2016. While this is still a healthy pace of jobs gains, the stagnant labor force participation rate and wage growth will have policymakers at the Federal Reserve wondering if the US economy is prepared for more interest rate increases. Most officials expected in June (pdf) that they would raise rates at least one more time by the end of the year, but weak inflation convinced many investors that they probably wouldn’t. This is keeping the dollar suppressed. Geopolitical concerns over tensions with North Korea and the looming need to increase the US debt ceiling aren’t helping the dollar either. But as the dollar languishes, other currencies are soaring. Most notably, the euro:

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