by Herbert Lash
New York, March 10 (Reuters) – The dollar weakened on Friday after US labor data for February showed a slowdown in wage growth, suggesting that easing inflation pressures may keep the Federal Reserve’s interest rate hike pace modest and thus reduce the dollar’s attractiveness.
The US economy added jobs at a rapid rate in February, but slowing wage growth and rising unemployment prompted financial markets to backtrack on expectations of a 50 basis point rate hike when Fed policymakers meet in two weeks.
Congressional testimony earlier in the week by Federal Reserve Chairman Jerome Powell was seen as hawkish and boosted the dollar as Treasuries pay more in yield than other government debt.
The dollar fell against all of the major currencies, but basically held steady against the Canadian dollar. dollar index = US dollarsthe currency trading basket, by 0.618%.
Adding to the decline in Treasury yields was Close SVB Financial GroupSIVB.Othe bank’s biggest failure since the financial crisis, as California regulators moved quickly to protect depositors in the startup-focused lender.
The yield on a standard 10-year Treasury note US10YT = RR It fell more than 22 basis points to less than 3.70% in the biggest one-day decline in four months. Bond yields move inversely to their price.
“There is a significant offer, in my opinion anyway, for a safe haven,” said Kevin Flanagan, head of fixed income strategy at WisdomTree. “There are concerns about potential banking stress.”
Average hourly earnings For all private sector workers, it rose 0.2% from 0.3% in January, raising the year-over-year figure to 4.6%. Economists had expected hourly earnings to rise 0.3% in February, which would have pushed wages up 4.7% annually.
Joe Manimbo, senior market analyst in Convera, Washington, said the dollar could be range bound as inflation slowing to the Fed’s 2% target is likely to be bumpy.
“When the market revises expectations for peak rates, we see the dollar take two steps higher. But once the dust settles, we see the dollar take a step back,” said Manimbo.
“The market is already expecting the Fed to pause this year, but exactly when is unknown.”
Fed funds futures fell to a probability of 41% up by 50 basis points when the Fed policy makers meet on March 22, compared to a probability of 71.6% a week ago, according to FedWatch CME.
Dec Mullarkey, managing director of investment strategy and asset positioning at SLC Management in Boston, said the market is ahead of the possibility of a 50 basis point hike at the next Fed meeting.
“A 25 basis point rate hike at this point makes more sense because it allows the Fed to continue tightening while extending the period in which it does so to allow the data to catch up,” he said.
euro EUR = It rose 0.57% to $1.064 and the pound sterling Sterling = It traded at $1.2024, up 0.83% on the day.
Andrzej Skiba, head of BlueBay’s U.S. fixed income team at RBC Global Asset Management in New York, said the “very important” consumer price index due March 14 is now front and center.
He said, “The focus now shifts to reading the consumer price index and general financial conditions in light of what is happening in the banking field in the United States.”
The Japanese yen rose 1.01% to 134.79 per dollar.
The dollar jumped earlier against the yen Japanese yen = EBS In an indirect movement after the Bank of Japan kept its policy without change At Governor Haruhiko Kuroda’s last political meeting before he stepped down in April.
While the “no surprises” decision was expected by most market watchers, many see the days of BOJ yield curve control (YCC) as numbered, which led to some pricing in the slim chance of a policy adjustment at Kuroda’s latest policy meeting. .
================================================== == ======
Coin bid prices at 3:45 PM (2045 GMT)
US close the previous session
Change YTD in Pct
= US dollars
Euro = EBS
+ 1.0574 USD
dollar / yen
Japanese yen = EBS
euro / yen
dollars / Swiss
Swiss Franc = EBS
British pound / dollar
British Pound = D3
Canadian dollar = D3
Australian dollar / dollar
Australian dollar = D3
Euro / Swiss
Euro / British Pound
New Zealand dollar / New Zealand dollar
NZD = D3
dollar / Norway
NOK = D3
Euro / Norway
Dollar / Sweden
Swedish Krona =
EUR / Sweden
Wage growth is slowinghttps://tmsnrt.rs/3l4HFFC
World currencies against the dollar IMGhttps://reut.rs/2xKnuUn
(Reporting by Herbert Lash in New York; Additional reporting by Ray Wei and Elon John; Editing by Susan Fenton and Matthew Lewis)
The views and opinions expressed herein are those of the author and do not necessarily reflect the views and opinions of Nasdaq, Inc.