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US dollar recovers from near three-month low ahead of key jobs data US dollar drifts lower after key jobs data
(about 5 hours later)
The US dollar recovered marginally from a 12-week low on Friday, but was on track to record a fourth consecutive week of losses. The US dollar gave up earlier gains against the euro and Japan's yen on Friday, putting it on track to record a fourth consecutive week of losses, after an employment report showed a smaller than anticipated rise in wages in January.
The dollar index, which measures the buck’s strength against a basket of other currencies, was up around 0.2 per cent on the day mid-morning in London according to Thomson Reuters data, at around 100.02.   The dollar index, which measures the buck’s strength against a basket of other currencies, was little changed on the day after the data was released, at around 99.85, according to Thomson Reuters data.
On Thursday it fell to 99.266, its lowest level since 13 November.On Thursday it fell to 99.266, its lowest level since 13 November.
Later in the day key jobs data out of the US could provide a fresh driver for the currency, which has been sent on a rollercoaster ride since the US election back in November. Figures on Friday showed that job creation in the US surged in January, but the cooling in wage growth sends an ambiguous signal about the likelihood of more near term interest rate hikes from the Federal Reserve.
It rallied hard in the immediate aftermath of Donald Trump’s victory, but its performance has since been marred by deep uncertainty around the new President’s policies.   According to official data, total non-farm payrolls rose by 227,000 last month, much higher than the 175,000 expected by economists.
According to a Thomson Reuters survey of economists, nonfarm payrolls are expected to have increased by 175,000 jobs last month, picking up from the 156,000 jobs added in December. But the unemployment rate ticked up to 4.8 per cent, from 4.7 per cent previously.
The unemployment rate is expected to be unchanged at 4.7 per cent in January, near a nine-year low. Furthermore, average earnings grew by only 0.1 per cent in the month, down from the 0.2 per cent expansion in December and below analysts' expectations, suggesting still muted inflationary pressure.
UniCredit strategists in a note to clients on Friday said that a strong jobs report could provide some relief to the dollar, but that this was likely to be short-lived. Expectations of a rate hike generally tend to support the dollar and James Athey, a senior investment manager at Aberdeen Asset Management, said that "all of the numbers point towards it being more difficult to justify another hike in March".
“On the other hand, should US payrolls surprise to the downside, we expect the [dollar] to accelerate its downward move across the board,” they wrote.