Karen Brettell
NEW YORK (Reuters) – The dollar fell to a three-week low against the yen on Friday after data showed U.S. job growth slowed more than expected in April and annual wage growth slowed, adding pressure to bets. that the Federal Reserve will cut rates twice this year.
Employers added 175,000 jobs last month, below economists’ expectations of a rise of 243,000. Wages rose 3.9% in the 12 months to April, below expectations of a 4.0% rise after rising 4.1%. in March.
The unemployment rate rose to 3.9% from 3.8%, remaining below 4% for the 27th straight month.
“The data across the board is unreliable from the Fed’s perspective,” said Jason Pride, head of investment strategy and research at Glenmede in Philadelphia.
Fed fund futures traders are betting the Fed will cut rates twice this year, with 47 basis points of easing priced in compared with 42 basis points before the data.
“The market is so hopeful at this point that the Fed can cut rates this year and didn’t want one of the hot numbers to come out. Today’s report certainly gives them a cooler outlook on the labor market,” said Quincy Crosby, chief global strategist. at LPL Financial (NASDAQ:) in Charlotte.
However, the report itself is unlikely to influence Fed policy unless this trend continues.
“An unemployment rate of 3.9% is not something catastrophic. This indicates that the economy is not in sharp decline, but it certainly points to a looser labor market,” Pride said. “It gives the Fed some hope, but it doesn’t set a trend for them.”
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The Fed said after its two-day meeting on Wednesday that persistent inflation means it will take longer to cut rates.
Inflation should continue to fall even as the U.S. central bank keeps its benchmark interest rate at current levels, Federal Reserve Chair Michelle Bowman said Friday, reiterating her willingness to raise the policy rate if progress slows or reverses.
The jobs report showed “robust” growth that has slowed to the point that it could give Fed officials more confidence that the economy is not overheating, Chicago Fed President Austan Goolsbee said Friday.
Other data on Friday showed the U.S. services sector contracted in March while the prices businesses pay for inputs jumped, a worrying sign for inflation prospects.
The euro was last down 0.27% at 105.03 after hitting 104.52, its weakest since April 10. The euro rose 0.39% to $1.0766.
The dollar weakened 0.48% to 152.9 Japanese yen, reaching 151.86, its weakest since April 10.
The yen rose in weak trading on Wednesday and Monday, which traders and analysts attributed to intervention by Japanese authorities.
Japanese Finance Minister Shunichi Suzuki said on Friday that authorities may have to smooth out any excessive movements in the yen that would hurt households and companies.
The yen is on track for its best weekly percentage gain against the US dollar since November 2022, after Japanese authorities also intervened in October 2022 to support the currency.
The yen hit a 34-year low of 160.245 on Monday as it suffers from wide interest rate differentials against the dollar.
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In cryptocurrencies, Bitcoin gained 5.30% to $61,828.