FOREX-Dollar Falls After US Jobs Report
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By Chuck Mikolajczak
NEW YORK, Jan. 7 (Reuters) – The US dollar edged down against a basket of major currencies on Friday on the heels of December’s jobs report that fell short of expectations.
The dollar index weakened after the Labor Department said non-farm payrolls increased by 199,000 last month, well below the estimate of 400,000.
But analysts noted that the data underlying the report looked stronger, with the unemployment rate falling to 3.9% from expectations of 4.1% while incomes rose 0.6%.
“All of these places that are very important to economic growth continue to grow, so that’s fantastic,” said JJ Kinahan, chief market strategist at TD Ameritrade in Chicago.
“So the number in the first row is missing, the stuff below all seems to be going well, but not at the rate that we would like to see.”
The report also raised expectations that the Federal Reserve will start raising interest rates at its March meeting, with federal funds rate futures implying a 90% chance of a hike, from 80%. % Wednesday.
The dollar index fell 0.269% to 96.001. Even with Friday’s weakness, the dollar was still on track for a weekly gain, its first in three weeks.
The euro rose 0.3% to $ 1.1325 as it strengthened against the greenback in the wake of the payroll report, after little reaction to data showing that inflation in the euro zone reached 5% in December.
Eurozone policymakers have said they expect inflation to slow gradually in 2022 and that a rate hike is unlikely to be needed this year.
The Japanese yen strengthened 0.12% against the greenback to 115.71 per dollar. The yen has taken most of the damage as the greenback has strengthened recently, with the dollar hitting a five-year high against the yen earlier this week.
The British pound was set for its third consecutive weekly gain and was last trading at $ 1.356, up 0.24% on the day, even after data showed growth in the UK construction sector had cooled in December as the Omicron variant of the coronavirus spread.
Despite the rapid spread of the Omicron variant, investors increasingly see it as unlikely to derail the global economy or more aggressive actions by central banks.
In cryptocurrencies, Bitcoin last fell 2.55% to $ 41,999.75. Ethereum last fell 5.63% to $ 3,216.44, on course for a third consecutive daily decline, after hitting its lowest level since October 1.
(Reporting by Chuck Mikolajczak; Editing by Angus MacSwan)