Published On: Sat, Mar 5th, 2016

Dollar under pressure as US wages dip

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The dollar fell against the euro Friday after a mixed US jobs report showed a dip in wages, clouding the outlook for a Federal Reserve interest rate hike this month.

Though the US economy added a much better-than-expected 242,000 jobs last month and the unemployment rate held at 4.9 percent, an eight-year low, there was a drop in the average wage and the average hours worked, suggesting remaining slack in the labor market.

“Unfortunately for the US dollar, the mixed nature of the report — especially the wage internals — have prevented a significant rebound” in the US Dollar Index, said Christopher Vecchio at DailyFX in a client note.

While the dollar index “initially reacted positively to the data, the seemingly strong report rang hollow,” he said.

The greenback fell 0.5 percent to $1.1008 per euro and 0.4 percent against the pound at $1.4233. It edged up to 113.79 yen.

Analysts said they expect the Fed will hold off from raising interest rates at its March 15-16 policy meeting, given signs of slowing US economic growth and the global slowdown.

“Most Federal Reserve officials have their minds made about keeping interest rates unchanged in March and today s jobs report reinforced the need for patience,” said Kathy Lien of BK Asset Management.

Lien said there was enough improvement in the jobs report for the Fed to keep a hawkish bias “which should limit the dollar s decline in the coming week especially since there are no major US economic reports on the calendar.”

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