The US dollar index fell nearly 2 percent on Friday, its biggest one-day drop in about seven years. US non-farm payrolls data for October were mixed earlier, with bigger-than-expected payrolls added, but the labor market showed some signs of slowing amid rising unemployment and falling wage inflation.
The ICE US Dollar Index (DXY), which tracks the greenback against six major currencies, was down 1.91% at 110.78 in late New York trading, up 0.02% for the week and close to rising earnings earlier in the week.
The United States announced that non-agricultural employment in October reached 261,000, which was higher than market expectations. The previous month’s data was revised upwards from 263,000 to 315,000. Meanwhile, the unemployment rate rose further to 3.7% in October, average hourly earnings growth expanded to 0.4%, and annual wage growth slowed to 4.7%.
The US dollar initially moved higher after the data and fell as markets digested the jobs report. Market participants noted that last month’s non-farm payrolls message was not entirely positive and could support the view that the Federal Reserve will slow the pace of rate hikes in the future.
Fed funds futures on Friday predicted a 51.5 percent chance of a three-point rate hike next month and a 48.5 percent chance of a two-point rate hike. Immediately after the data came out, the chance of a 3-yard rate rose to 64%.
Thomas Simons, money market economist at Jefferies, said: “Overall, although today’s report is mixed, we don’t understand how the Fed looks at these data and thinks they have made meaningful progress in controlling inflation. “
Job growth is slowing, as is wage growth, but neither is slowing fast enough, Simons said. While several key data releases remain between now and the December decision-making meeting, he believes today’s non-farm payrolls data confirms the likelihood of a 3-yard rate hike at next month’s meeting.
Some Fed officials backed a moderate rate hike in December even as the jobs data remained strong. Richmond Fed President Thomas Barkin told CNBC he was open to the outcome of the decision at next month’s meeting, but was prepared to take more cautious steps on the pace of future rate hikes, which could mean slower rate hikes, hikes longer rate, and higher endpoint rates.
Under the dollar’s depreciation, other major currencies got a boost. The yen rose 1.05% against the dollar to 146.62 against the dollar, closing at a one-week high, the euro rebounded more than 2% against the dollar to $0.9957; the pound rose strongly against the dollar 1.9% to $1.1373.
The Yen closed slightly in the red against the dollar this week, while the euro and sterling closed in the black against the dollar.
According to economists at Rabobank, EUR/USD could fall towards the $0.95 mark and remain weak for a longer period of time, as it is uncertain whether the ECB will continue to support the euro by raising interest rates, and it’ the euro is still leading. which face the Eurozone economy have not been fully digested.
The Australian dollar rose 2.9% to $0.6468 and was on track to close at its highest level since October 26. The Aussie was up about 0.8% against the US dollar this week.
From Saturday (5th) Taiwan time around 6:00 Price:
- The dollar index was 110.7822. -1.9456%
- The euro/dollar exchange rate (EUR/USD) was quoted at $0.9958 per euro. +2.1543%
- The British pound against the US dollar exchange rate (GBP/USD) was quoted at 1.1372 yuan per pound. +1.9088%
- The exchange rate of the Australian dollar against the US dollar (AUD/USD) was quoted at 1 Australian dollar to 0.6468 yuan. +2.8299%
- The US dollar against the Canadian dollar (USD/CAD) was trading at 1.3477 Canadian dollars. -1.9569%
- The US dollar was quoted against the Japanese yen (USD/JPY) at 146.65 yen per dollar. -1.0392%
