US dollar gains after mixed jobs report
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THE US dollar gained against the euro and Japanese yen on Friday (Sep 1) after the August jobs report showed a still strong labour market, despite some signs of deterioration.
Employers added 187,000 jobs in August, above expectations for a 170,000 gain. But data for July was revised lower to show 157,000 jobs added instead of the previously reported 187,000. The unemployment rate rose to 3.8 per cent, above the expected 3.5 per cent.
The dollar index was last up 0.58 per cent at 104.23.
It is up 0.08 per cent on the week, overcoming price drops earlier caused by softening economic data.
The euro fell 0.59 per cent to US$1.0779, down 0.13 per cent on the week against the US currency. The greenback rose 0.42 per cent to 146.145 Japanese yen, after earlier falling to 144.44, the lowest since Aug 11. It is down 0.12 per cent on the week.
Fed funds futures traders are now pricing in a 93 per cent likelihood that the Federal Reserve will leave rates unchanged at its September meeting and see only a 36 per cent chance of a hike in November, according to the CME Group’s FedWatch Tool.
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Some special circumstances impacted Friday’s jobs report. A strike by Hollywood actors resulted in a fall of 17,000 jobs in the motion picture and sound recording industries last month. The bankruptcy of trucking firm Yellow last month led to 37,000 job losses in the industry. Without these one-time drags, payrolls would have risen by about 241,000 in August.
Other data on Friday showed that US manufacturing contracted for a 10th straight month in August, but the pace of decline continued to slow, suggesting that the sector could be stabilising at lower levels.
European Central Bank policymaker Boris Vujcic said that weaker economic growth could bring eurozone inflation down faster, but a resilient labour market continues to produce quick wage growth, creating upside risk for prices.
ECB policymaker Francois Villeroy de Galhau also said that the ECB has a range of options at its next interest rate meeting, although interest rates are near their high point and there are signs that underlying inflation has peaked. Money markets are pricing in a 79 per cent likelihood that the ECB will leave rates unchanged at its September meeting. REUTERS
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