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The US dollar fell on Friday after the release of the country’s nonfarm payrolls report for October. The latest NFP reading indicated that the world’s largest economy created more new jobs than expected, but also flashed other signs of economic slowdown with a higher unemployment rate and lower wage inflation.
The dollar initially rose immediately after the data, but fell as market participants digested the jobs data, noting the data was not all positive and supports the view the Federal Reserve could slow the pace of future rate hikes.
Economic Data
US nonfarm payrolls increased 261,000 last month, data showed on Friday. Data for September was revised higher to show 315,000 jobs added instead of 263,000 as previously reported. Economists polled by Reuters had forecast 200,000 jobs, with estimates ranging from 120,000 to 300,000.
However, the unemployment rate rose to 3.7% from September’s 3.5%. Average hourly earnings increased 0.4% after rising 0.3% in September, but the rise in wages slowed to 4.7% year-on-year in October after advancing 5.0% in September. read more
Other Developments
Payroll growth is slowing and wage growth is decelerating, but neither one is slowing fast enough. Today’s data leaves the possibility of another 75-bp rate hike firmly on the table for the December FOMC meeting, though obviously we have several other important data releases between now and then.
Despite the strong jobs data, Fed officials on Friday said a smaller rate increase is still on the table for the December policy meeting.
The jobs numbers show “the labor market remains tight,” Richmond Fed President Thomas Barkin told broadcaster CNBC soon after the release of the data, adding he nevertheless is ready to act more deliberatively on the pace of future rate increases even as he keeps an open mind on the outcome of the next policy meeting in December. read more
The dollar fell 1.1% against the yen to 146.65 yen , posting losses for a third straight week. The euro, on the other hand, rose 2.2% to $0.9960 .
The dollar index fell 1.9% to 110.77 , on track for its largest one-day percentage loss since November 2015. Speculators reduced their net long bets on the US dollar to $3.08 billion for the week ended Nov. 1, compared with a net long position of $10.21 billion last week, according to calculations by Reuters and US Commodity Futures Trading Commission data released on Friday. read more
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