Written by Karen Brettell
NEW YORK (Reuters) – The dollar fell to a three-week low against the yen on Friday after data showed U.S. job growth slowed more than expected in April and annual wage gains slowed, raising bets that the Federal Reserve (the U.S. central bank) will cut… Interest rates twice this year. .
Employers added 175,000 jobs last month, lower than economists' expectations of an increase of 243,000 jobs. Wages rose 3.9% in the 12 months through April, below expectations for a 4.0% increase after rising 4.1% in March.
The unemployment rate rose to 3.9% from 3.8%, remaining below 4% for the twenty-seventh month in a row.
“The data is weak across the board from the Fed’s perspective,” said Jason Pride, head of investment strategy and research at Glenmede in Philadelphia.
Fed funds futures traders raised their bets that the Fed will cut interest rates twice this year, with 47 basis points of easing priced in, up from 42 basis points before the data.
“The market at this point is very hopeful that the Fed will be able to cut interest rates this year and does not want one of the hot numbers to come out,” said Quincy Crosby, chief global strategist. “Today’s report certainly gives them a cooler read on the business landscape.” At LPL Financial (NASDAQ:) in Charlotte.
However, the report itself is unlikely to influence Fed policy unless this trend continues.
“An unemployment rate of 3.9% is not catastrophic,” Pride said. “It indicates that the economy is not declining significantly, but it certainly indicates a more flexible labor market.” “It gives the Fed some hope, but it doesn't set the direction for them.”
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The Fed said after its two-day meeting on Wednesday that steady inflation means it will take longer to cut interest rates.
Federal Reserve Governor Michelle Bowman said on Friday that inflation should continue to decline even as the US central bank keeps its benchmark interest rate at current levels, while reiterating its readiness to raise interest rates if progress diminishes or reverses.
Chicago Fed President Austan Goolsbee said on Friday that the jobs report showed “strong” growth that had slowed to a point that might make Fed officials more confident that the economy is not experiencing overheating.
Other data on Friday showed the US services sector contracted in March, while a measure of the prices companies pay for inputs jumped, a worrying sign about inflation expectations.
The latter fell by 0.27% to 105.03 after reaching 104.52, the lowest level since April 10. The euro gained 0.39% to $1.0766.
The US currency fell 0.48 percent to 152.9 Japanese yen, reaching 151.86 yen, its lowest level since April 10.
The yen rose in light trading late Wednesday evening and Monday, which traders and analysts attributed to the intervention of the Japanese authorities.
Japanese Finance Minister Shunichi Suzuki said on Friday that authorities may need to moderate any excessive yen moves that hurt households and businesses.
The yen is heading for its best weekly percentage gain against the dollar since November 2022, after Japanese authorities also intervened in October 2022 to support the currency.
The yen hit a 34-year low of 160.245 on Monday, suffering from a wide interest rate differential with the dollar.
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In cryptocurrencies, Bitcoin rose 5.30% to $61,828.