By Gertrude Chavez-Dreyfuss
NEW YORK, November 4 (Reuters) – The dollar tumbled on Friday after the US nonfarm payrolls report for October showed the world’s largest economy added more new jobs than expected, but also showed signs of slowing with a higher unemployment rate and lower wage inflation.
The greenback initially rose immediately after the data, but fell as market participants digested the jobs report, noting that the data was not all positive and supporting the idea that the Federal Reserve could slow the pace of future rate hikes.
Nonfarm payrolls in the United States rose by 261,000 last month, data showed Friday. September’s data has been revised up 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 fell from 3.5% to 3.7% in September. Average hourly earnings rose 0.4% after rising 0.3% in September, but wage growth slowed to 4.7% year-on-year in October after rising 5.0% in September.
Fed funds futures on Friday priced a 52.5% chance of a 75 basis point hike in interest rates next month and a 47.5% chance of a 50 basis point hike. basic. The probability of a 75 basis point hike jumped to 64% immediately after the payroll data. FEDWATCH
The Fed’s terminal rate, or the level at which rates would peak, slipped to 5.09% late Friday, from around 5.2% just before the data.
“While today’s report is pretty mixed overall, we don’t see how the Fed can look at this data and think it’s making meaningful progress toward controlling inflation,” said economist Thomas Simons. money market at Jefferies in New York. York.
“Payroll growth is slowing and wage growth is slowing, but neither is slowing fast enough. Today’s data leaves the possibility of another 75 basis point rate hike firmly on the table for the December FOMC meeting, although we obviously have several other important data releases between now and then.”
Despite the strong jobs data, Fed officials said Friday that a modest rate hike was still on the table for the December meeting.
The jobs numbers show “the labor market remains tight,” Richmond Fed Chairman Thomas Barkin told CNBC shortly after the data was released, adding that he was nevertheless ready to act more “deliberately” on the pace of future rate hikes, even as he maintains an open mind on the outcome of the next policy meeting in December.
The dollar fell 1.1% against the yen to 146.65 yen JPY=EBS, posting losses for a third consecutive week.
The Euro, on the other hand, rose 2.2% to $0.9960 EUR=EBS.
The dollar index, a measure of the value of the greenback against six major currencies, fell 1.9% to 110.77. =USD, on track for its biggest one-day percentage loss since November 2015.
Speculators reduced their net long bets on the U.S. dollar to $3.08 billion for the week ended November 1, from a net long position of $10.21 billion last week, according to Reuters calculations and US Commodity Futures Trading Commission data released Friday.
The U.S. currency strengthened on Wednesday and Thursday after Fed Chairman Jerome Powell said on Wednesday that the central bank could continue to raise rates if inflation does not ease, forcing markets to price in a higher peak for US rates.
Bid rates for currencies at 4:11 p.m. (GMT 2011)
Closing of the previous session
Percentage change since the beginning of the year
New Zealand Dollar/Dollar
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(Reporting by Gertrude Chavez-Dreyfuss; Additional reporting by Joice Alves and Alun John in London; Editing by Jonathan Oatis, Chizu Nomiyama and Chris Reese)
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