Dollar Lower After Disappointing US Wage Growth

The dollar edged lower against yen and euro on Friday in choppy trading after the U.S. employment report showed a smaller-than-expected rise in wages last month despite strong jobs gains, raising doubts about the strength of the economy.

The report though was positive overall, analysts said, and should keep the Federal Reserve on track for multiple rate hikes this year.

Data showed that January non-farm payrolls rose by 227,000 jobs, the largest gain in four months. But the unemployment rate rose one-tenth of a percentage point to 4.8 percent and wages increased modestly, suggesting that there was still some slack in the labor market that would keep dollar-negative inflation in check. “I think the biggest miss here is that wages were considerably soft, although I don’t think this will delay the Fed,” said Omer Esiner, chief market analyst, at Commonwealth Foreign Exchange in Washington.

Average hourly earnings rose just 0.1 percent, lower than the market’s forecasts for a 0.3 percent increase. There was also a downward revision to the December wage growth, suggesting the Fed might not rush to hike rates again.

via Kitco

This article is for general information purposes only. It is not investment advice or a solution to buy or sell securities. Opinions are the authors; not necessarily that of OANDA Corporation or any of its affiliates, subsidiaries, officers or directors. Leveraged trading is high risk and not suitable for all. You could lose all of your deposited funds.

Alfonso Esparza

Alfonso Esparza

Senior Currency Analyst at Market Pulse
Alfonso Esparza specializes in macro forex strategies for North American and major currency pairs. Upon joining OANDA in 2007, Alfonso Esparza established the MarketPulseFX blog and he has since written extensively about central banks and global economic and political trends. Alfonso has also worked as a professional currency trader focused on North America and emerging markets. He has been published by The MarketWatch, Reuters, the Wall Street Journal and The Globe and Mail, and he also appears regularly as a guest commentator on networks including Bloomberg and BNN. He holds a finance degree from the Monterrey Institute of Technology and Higher Education (ITESM) and an MBA with a specialization on financial engineering and marketing from the University of Toronto.
Alfonso Esparza