Dollar Creeps Higher, Shrugs off Signs of Sluggish Inflation
By Yasin Ebrahim
Investing.com – The U.S. dollar edged higher Friday, shrugging off expectations that a continued slowdown in U.S. wages will weigh on the pace of inflation and keep interest rates lower for longer.
The U.S. dollar index, which measures the greenback against a trade-weighted basket of six major currencies, rose by 0.18% to 98.55.
The U.S. created 225,000 jobs last month, well above the economists' consensus forecast of 160,000.
The unemployment rate, however, unexpectedly ticked up to 3.6%, and average hourly earnings slowed to a pace of 0.2% form 0.3%, missing expectations of 0.3%. The annual pace of the wage growth of 3.1% topped economists' forecasts.
The increase in job gains last month indicates the economy remains in a "good place", but the softer wage print and upside surprise in joblessness "will only reinforce concerns about inflation staying below the target," Bank of Montreal said in a note.
The dollar's advance, however, was kept in check by a climb in safe-haven currencies as the risk-on rally seen this week took a breather after fresh coronavirus fears emerged.
USD/JPY fell 0.24% to Y109.73. ,
GBP/USD slipped 0.27% to $1.289 as ongoing fears that the U.K. and EU are set for rocky Brexit trade talks in the coming months.
"Sterling's decline in reaction to the U.K.'s clash with the EU over a trade deal this week could be a sign of things to come for the currency," said UniCredit.
U.K. Prime Minister Boris Johnson said earlier this week that he was unwilling to accept the EU's request to sign up to its rules in any potential trade deal.
EUR/USD fell 0.29% to $1.0948 and USD/CAD added 0.13% to C$1.3301, with downside momentum in the loonie limited by stronger Canadian manufacturing data.
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