NEW YORK: The dollar erased earlier losses and edged higher against the euro and Japanese yen on Friday after the August jobs report showed a still strong labor market, despite some signs of deterioration.
Employers added 187,000 jobs in August, above expectations for a 170,000 gain. The unemployment rate rose to 3.8%, above the expected 3.5%. Average hourly earnings rose by 4.3% for the year, below expectations for a 4.4% gain.
Data for July was also revised lower to show 157,000 jobs added instead of the previously reported 187,000.
“Today’s jobs report provides investors the best of both worlds. It’s the labor market softening just enough to keep the Fed at bay while it’s strong enough to prevent an economic recession,” said Michael Arone, chief investment strategist at State Street Global Advisors in Boston.
The dollar index was last up 0.10% at 103.71. The euro dipped 0.04% to $1.0837. The greenback rose 0.04% to 145.61 Japanese yen, after earlier falling to 144.44, the lowest level since Aug. 11.
Fed funds futures traders are now pricing in a 93% likelihood that the Federal Reserve will leave rates unchanged at its Sept. 19-20 meeting and see only a 37% chance of a hike in November, according to the CME Group’s FedWatch Tool.
There were almost 18,000 workers on strike during the period data was gathered, including 16,000 Screen Actors Guild-American Federation of Television and Radio Artists members.
Elsewhere, European Central Bank policymaker Boris Vujcic said on Friday that weaker economic growth could bring euro zone inflation down faster, but a resilient labor 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 underlying inflation has peaked.
Money markets are pricing in a 77% likelihood that the ECB will leave rates unchanged at its September meeting.
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