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The Dollar was sold after it was announced the U.S. added just 22K jobs in August.
This massively undershoots the consensus estimate for 75k, raising the odds that the Federal Reserve cuts interest rates by a significant 50 basis points later this month.
"I would not be surprised if markets try to push the Fed towards a 50bp cut after this," says Kallum Pickering, Chief Economist at Peel Hunt.
Of further concern to U.S. policy makers will be that BLS net revisions sucked a further 21k jobs from the reports issued over the previous two months.
"We expect market focus to shift toward calls for a larger move, with a 50bp cut now in play. The data has driven a sharp move lower in the USD and US yields," says Harun Thilak, Head of Global Capital Markets North America at Validus Risk Management.
U.S. short-term bond yields are falling as markets ramp up bets for further Fed rate cuts, which is weighing on the USD: the pound to dollar exchange rate (GBP/USD) rose to 1.35 in the ten-minute window that followed the release, having been at 1.3450 just prior to release.
"Another not-so-good report in August that will likely be enough to convince the wait-and-see group in the FOMC to cut in September in the face of growing downside risks to the job market," says Ali Jaffery, economist at CIBC Capital Markets.
A materially weak jobs report was required to undermine an increasingly resilient U.S. Dollar, which has proven increasingly resilient over the mid-part of the year.
Whether these data deliver enough of a body blow to trigger another leg to the H1 selloff remains to be seen, but we suspect weakness will prove relatively short-lived.
This is because the Federal Reserve's ability to cut interest rates will be severely restrained by U.S. inflation, which means short-term rates will continue to offer the dollar support.
All eyes now turn to next week's inflation report for verification.
Also keep in mind that this week saw a flare-up in ex-U.S. risk, for instance UK and French bond yields. If the second half of the year is characterised by global issues, then the USD could find its traditional safe-haven status a source of support.