The US dollar weakened on Friday after data for last month showed jobs gains that fell short of expectations, while wage increases slowed on an annualized basis during the month, easing concerns about a large run-up in inflation.
Non-farm payrolls increased by 134,000 jobs last month, the fewest in a year, although data for July and August were revised to show 87,000 more jobs added than previously reported.
Average hourly earnings last month increased US$0.08, or 0.3 percent, after rising 0.3 percent in the prior month.
With last month’s increase below the 0.5 percent gain notched during the same period last year, that lowered the annual increase in wages to 2.8 percent from 2.9 percent in August, which was the biggest rise in more than nine years.
“Wage inflation is creeping higher, but it has not accelerated as the market was fearing,” said Russell Price, senior economist at Ameriprise Financial Services in Troy, Michigan.
Investors have been watching for indications that wages might rise at a faster pace as companies, including Amazon.com Inc, raise minimum wages.
Still, the data were seen as solid and supportive of the US Federal Reserve continuing to tighten monetary policy.
“There is no material slowdown in the US economy. These numbers will confirm the Fed remains on track for steady rate hikes,” said Paresh Upadhyaya, director of currency strategy at Amundi Pioneer Asset Management in Boston.
The US dollar reversed direction several times before settling at lower levels after the data.
The US dollar index fell as low as 95.516, from about 95.770 before the data, before rising back to 95.60. The index is up 0.5 percent for the week.
In Taipei, the New Taiwan dollar fell against the greenback, losing NT$0.048 to close at NT$30.840, down 1 percent from last week’s NT$30.551.
The Japanese yen on Friday strengthened 0.17 percent versus the greenback at ￥113.63 per US dollar, little changed from last week’s ￥113.70.
The British pound rose 0.74 percent to US$1.3114, up 0.7 percent from last week’s US$1.3029.
Hawkish Fed speakers and strong US economic growth have supported the greenback in the past few weeks.
A dramatic surge in US Treasury yields this week that might attract investors seeking higher returns is also seen as positive for the US currency.
“Certainly these higher yields are giving a better bid to the US dollar across the board,” said Dean Popplewell, chief currency strategist at Oanda Corp in Toronto.
Given recent strength, investors are also likely to be cautious about being short on the US currency before a long weekend, Popplewell said, adding that “there is good demand for US dollars definitely on pullbacks.”
The US bond market will be closed tomorrow for the Columbus Day holiday, although stock markets are open.
Additional reporting by CNA and Reuters
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