The US dollar tumbled on Friday on a report that North Korea is preparing to test a long-range missile, overturning earlier gains after the government’s jobs report for last month showed an unexpected rise in wages.
Russia’s state-owned RIA Novosti news agency cited a Russian lawmaker’s comments on the missile test, which North Korea believes can reach the US west coast.
“The market is getting more nervous about the prospect of some kind of a conflict,” said Boris Schlossberg, managing director of foreign-exchange strategy at BK Asset Management in New York. “If they do something over the weekend, even if it’s a mild test, I’m sure we’re going to open up a with little bit of risk aversion on Monday.”
The US dollar earlier rose to a more than two-month high against the yen and seven-week high against the euro as wage data from a US labor market report for last month was seen as a sign of potentially improving inflation.
US average hourly earnings increased US$0.12, or 0.5 percent, last month, after rising 0.2 percent in August.
The gains came as US non-farm payrolls fell by 33,000 jobs last month after hurricanes Harvey and Irma left displaced workers temporarily unemployed and delayed hiring.
The US dollar index fell 0.12 percent to 93.8 on Friday, up from last week’s 93.08.
In Taipei, the New Taiwan dollar fell against the greenback on Friday, losing NT$0.026 to close at NT$30.376. The local currency fell 0.2 percent against the US dollar from last week’s NT$30.305.
The euro on Friday rebounded 0.2 percent to US$1.1733, but was down 0.7 percent from last week’s US$1.1815.
The Japanese yen on Friday reversed course to strengthen 0.16 percent to ¥112.63 per US dollar, but was down 0.1 for the week.
Tepid inflation has been a bugbear for the US Federal Reserve, which has puzzled over why price pressures remain low even as the job market improves.
The wage improvement boosted already high expectations that the US central bank will raise rates at its December meeting, and that further hikes next year are likely.
“The Fed signaled three rate hikes next year for the dot plots and the market does not believe that,” Thin said. “I think if we start getting more numbers like that the market is going to have to believe it more and more.”
Additional reporting by CNA
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