US June payrolls rise only 57,000 vs 113,000 expected, dollar hits two-week low, gold and silver surge

Rich Asplund Thu, July 2, 2026 at 7:35 AM PDT 4 min read

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The dollar index (DXY00) fell to a two-week low today, declining by -0.68%. The dollar tumbled following a weaker-than-expected US June payroll report, which dampened speculation that the Federal Reserve will tighten monetary policy anytime soon.

The dollar also faced pressure from declining crude oil prices, with WTI crude falling to a 4.25-month low. This lowers inflation expectations and is considered dovish for Fed policy. Some support for the dollar came after weekly jobless claims unexpectedly declined and May factory orders fell less than anticipated.

Key Labor Market Data

• US June nonfarm payrolls rose by +57,000, weaker than the expected +113,000.
• May nonfarm payrolls were revised lower to +129,000 from the originally reported +172,000.
• June unemployment rate unexpectedly fell by -0.1% to a one-year low of 4.2%, indicating a stronger labor market than expectations of no change at 4.3%.
• US average hourly earnings rose +0.3% month-over-month and +3.5% year-over-year, in line with expectations.

Other Economic Indicators

• Weekly initial unemployment claims unexpectedly fell by -1,000 to 215,000, stronger than the expected increase to 218,000.
• May factory orders fell -1.3% month-over-month, a smaller decline than the expected -2.0%.
• May factory orders excluding transportation rose +1.9% month-over-month, exceeding expectations of +1.0% and marking the largest increase in more than four years.

Market Expectations

Swaps markets are currently pricing a 20% probability of a +25 basis point rate hike at the next FOMC meeting on July 28–29.

Currency Markets

EUR/USD (^EURUSD)

The euro climbed to a 1.5-week high today, up by +0.61%. The move higher followed the weaker-than-expected US jobs report, which pushed the dollar lower. The euro also received support from Eurozone economic data showing Italy's unemployment rate unexpectedly fell to a record low—a hawkish factor for ECB policy.

• Italy's May unemployment rate unexpectedly fell by -0.1% to a record low of 5.0% (data available since 2004), stronger than expectations of no change at 5.1%.

Markets are discounting a +3% chance of a +25 basis point rate hike by the ECB at its next policy meeting on July 23.

USD/JPY (^USDJPY)

The yen rallied sharply today to a two-week high against the dollar, down by -0.97%. The move followed a Reuters report fueling speculation that Japanese authorities were preparing to intervene in the currency market to support the yen.

The yen also gained support from a jump in Japanese government bond yields, with the 10-year JGB yield rising to a five-week high of 2.787%, strengthening the yen's interest rate differentials. The yen added to its gains after Treasury note yields fell on the weaker-than-expected US jobs report.

Intervention Risk: Reuters reported that Japan's Ministry of Finance could abandon telegraphing its intentions to the forex market and step in abruptly to wipe out speculative yen positions in a surprise intervention. The risk of intervention is rising after Japanese Finance Minister Satsuki Katayama said she spoke with US Treasury Secretary Scott Bessent last Tuesday, and they agreed to take "bold" steps on currencies if needed, noting that the nations are increasingly "aligned" on foreign-exchange policy. With the yen firmly above 160 per dollar at a 39-year low, intervention risks have increased, as Japanese authorities have intervened several times in the past when the yen reached that level.

Markets are discounting a +2% chance of a +25 basis point BOJ rate hike at the next policy meeting on July 31.

Precious Metals

• August COMEX gold (GCQ26): Up +60.60 (+1.48%)
• September COMEX silver (SIU26): Up +1.574 (+2.60%)

Gold and silver prices are sharply higher today, posting one-week highs. The slump in the dollar to a two-week low is bullish for metals prices. Additionally, the weaker-than-expected US jobs report reduces the chances of Fed tightening, which is supportive for precious metals. The fall in WTI crude oil to a 4.25-month low also lowers inflation expectations and may prompt central banks worldwide to ease monetary policy—a bullish factor for metals.

More from Barchart:

• Dollar Rises With T-note Yields
• Dollar Supported by Euro and Yen Weakness
• June's Top Commodity Performers and Underperformers
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