The U.S. currency dropped 0.2% to 148.09 yen and declined 0.06% to 0.8042 franc

The U.S. dollar dropped against the Japanese yen and Swiss franc on Wednesday after economic data showed weakening labor market conditions, supporting investor expectations of U.S. monetary policy easing by the central bank.

The U.S. Labor Department said on Wednesday that job openings, a measure of labor market demand, dropped more than expected to 7.181 million in July.

With the Fed focused on the jobs market, the U.S. dollar will continue weakening materially if data continues to show deterioration in labor market conditions, said Eugene Epstein, head of structuring for North America at Moneycorp in New Jersey.

Between (Fed Chair) Powell’s dovishness at Jackson Hole regarding the job market and the previous non-farm payrolls being weak and today’s JOLTS being weak, and if Friday’s jobs number is weak, it’s a big dovish dynamic going on. It’s very hard to see any options at all, especially given what’s going on politically with the Fed right now with the current U.S. administration, Epstein said.

The dollar erased earlier gains against the yen and franc following the data. It dropped 0.2% to 148.09 yen and declined 0.06% to 0.8042 franc.

The euro added to its gains against the dollar. It was last up 0.14% at $1.165850.

The jobs openings data showed a further contraction in the number of openings and provided conviction to the labor market part of the equation for the Federal Reserve, said Amo Sahota, director at Klarity FX in San Francisco. We didn’t see a huge move in the currency market but I do think what’s notable is that the overnight swap market is now pricing in a U.S. rate cut at 95% for September.

The dollar index shed 0.24% to 98.165.

The British pound gained against the dollar following a selloff in UK government bonds.

Sterling firmed 0.38% to $1.3442.