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Forex - Dollars Falls Amid 'Fluky' Slump in U.S. Job Gains
Published Mar 08, 2019 02:32PM ET
Updated Mar 08, 2019 02:58PM ET
© Reuters.
Investing.com – The U.S. dollar fell against its rivals on Friday as investors digested a mixed labor market report showing a surprising slump in job gains for February.
The slump was so surprising that White House economic advisor Larry Kudlow dismissed it as “very fluky” and said no one should pay attention to it.
U.S. dollar index, which measures the green against a trade-weighted basket of six major currencies, fell by 0.34% to 97.29. The greenback, however, is set to post a weekly gain following a rally in the previous session.
Nonfarm payrolls rose by just 20,000 compared to expectations for a 181,000 gain, according to economists surveyed by Investing.com. That was the smallest gain since September 2017.
The unemployment rate fell to 3.8%, while average hourly earnings, an important number to gauge inflation, rose 3.4% year over year in February.
The plunge in job gains was largely downplayed by Wall Street, with many citing weather-related disruption as one the main headwinds.
The slowing may reflect "some moderation" in the trend, but much of decline was likely caused by "weather effects," High Frequency Economics said. "While the three-month average of job gains is a still-healthy 186,000, that is below what has been a 200K-plus trend."
"The trend likely remains more than strong enough to keep the unemployment rate trending down over time," HFE added.
On the housing front, The Commerce Department said U.S. housing starts surged 18.6% to a seasonally adjusted annual rate of 1.23 million units in January, well above the Investing.com estimate for a 15% rise above 10%.
A plunge in the pound, meanwhile, kept a lid on losses in the greenback after EU chief Brexit negotiator Michel Barnier detailed a proposal that would have allowed the U.K. to unilaterally exit the Irish backstop, as long as Northern Ireland remain inside it.
The proposal is likely to be rejected by Prime Minister Theresa May because it could potentially lead to Northern Ireland being annexed by Ireland from the U.K.
With little sign that May will be able to secure a material change to the Irish backstop issue, many expect the prime minister's withdrawal agreement to be voted down next week.
GBP/USD fell 0.62% to $1.3004, while EUR/USD rose 0.45% to $1.1243.
USD/CAD fell 0.37% to C$1.3404, while USD/JPY lost 0.43% to Y111.11.
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