Dollar turns negative, erasing spike seen after storm-impacted jobs report
The U.S. dollar turned negative against most major rivals on Friday after initially spiking higher on a hurricane-ridden employment report that showed the first decline in job creation in seven years but better-than-expected wage growth.
Where are currencies trading?
The ICE U.S. Dollar Index DXY, -0.13% which measures the U.S. currency against six major rivals, was down 0.2% at 93.809, after hitting an intraday high of 94.261. On the week, the dollar gauge is up 0.8%. The WSJ U.S. Dollar Index BUXX, +0.00%which is a broader measure of the greenback, was little changed at 86.97, climbing 0.8% on the week.
Meanwhile, the British pound GBPUSD, -0.3735% was buying $1.3068, down from $1.3118 late Thursday in New York, and was hovering at levels not seen since early September. Week-on-week, sterling dropped 2.5%, making it the biggest since the week ending Oct. 7 of last year, when the currency lost 4.1% against the dollar after a flash crash. Against the euro, it EURGBP, +0.5937% was little changed at, with one euro buying £0.8980, up 1.8% since last Friday.
The euro EURUSD, +0.1793% strengthened as the session went on, last changing hands at $1.1735, up from $1.1711 late Thursday in New York, after earlier hitting its lowest level since July. On the week, the euro shed 0.7%.
The dollar slipped against the Japanese yen USDJPY, -0.15% buying ¥112.65 after initially jumping to a 12-week high, compared with ¥112.82 late Thursday. The dollar was little changed against the yen on the week, gaining 0.1%.
Against the Swiss franc USDCHF, -0.3578% the dollar was little changed at 0.9782 francs. On the week, the buck jumped 1.1% against the franc, making it the second biggest weekly move among the main dollar pairs.
What’s driving the market?
In the U.S., data was a big driver, with investors focusing on a 0.5% September increase in wages, which brought the year-over-year increase to 2.9% versus 2.7% in August, matching a postrecession high. The 2-year Treasury yield TMUBMUSD02Y, +1.67% jumped, contributing to the dollar’s knee-jerk spike higher.
For the euro, investors were looking at data that showed a surge in German manufacturing orders in August, which more than made up for an unexpected fall in July, and are beginning to focus on potential moves by the European Central Bank to taper its quantitative easing program, according to Lennon Sweeting, head of corporate trading and chief market strategist at XE.com.
What are market participants saying?
“The main takeaway from today’s North American jobs report will reinforce what the market was already expecting,” said Marc Chandler of Brown Brothers Harriman, adding that the Federal Reserve’s anticipated December rate hike is likely still on track.
On the pound, the fact that it is falling against the euro as well as the dollar means the problems are localized, wrote Jasper Lawler, head of research at LCG, in a note to clients.
What are the data saying?
The U.S. unemployment rate dropped to 4.2% in September, beating the MarketWatch consensus estimate of 4.4%, making this the lowest point in the data since December 2000.
Nonfarm payrolls contracted by 33,000, undercutting consensus estimates of 75,000, and average hourly wages rose 0.5% in September, exceeding forecasts of 0.3%.
Wholesale inventories for August rose to 0.9%, up from 0.6% in the previous month. Consumer credit slowed to $13 billion in August, down from $18 billion in July.