Dollar Falls After Weak Employment Report

The Chilean exchange rate ended slightly lower this Wednesday, after suffering some volatility due to the latest official payroll report in the United States, which gave a boost to interest rates in dollars.

Although the dollar-peso parity jumped to $859 at the time the employment data was published, it then remained oscillating in a narrow range, and in low liquidity hours it went down. In the end, it fell $2.9 to $854.7 on Bloomberg screens,

He dollar index erased its profits to remain stable, despite the fact that The two-year Treasury yield – sensitive to what is expected from the Federal Reserve – jumped 5.2 basis points. Copper futures, which at times reversed their morning gains, now they rose 0.9% to US$ 5.97 per pound.

How much resilience?

130 thousand jobs were created (doubling the consensus estimate) while the unemployment rate fell one tenth to 4.3% (when it was expected to remain stable)as reported this morning by the Bureau of Labor Statistics of the Department of Labor.

But the annual payroll review corresponding to 2025 was also released, which saw a total reduction of 862 thousand jobsfigure slightly deeper than expected.

Thus, the signs of strength and their effect on yields were not enough to sustain demand for dollars. In fact, the currency weakened or was stable in most of the emerging world, including all of Latin America.

The Fed is still expected to lower rates twice this year, only that, with this latest data, a relevant probability of there being three cuts in total is no longer discounted, if the US money markets are taken as a reference.

The payroll report was initially scheduled for last Friday, but had to be postponed due to a brief partial government shutdown. It comes after retail sales surprised lower on Tuesday, and before consumer prices will be published on Friday.

The dollar-peso parity came from close higher this tuesdayrebounding from its lows since August 2023, partly due to copper’s losses in that session.

At least until Monday, the dismantling of foreign positions against the peso has continued to deepen in the derivative market. The position of non-residents was estimated at a little less than US$ 4.3 billion net against the local currency, far from the US$ 9.6 billion seen in mid-January, according to data from the Central Bank.