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Dollar under pressure as US wages dip

Mar 06 2016 11:04

New York - The dollar fell against the euro Friday after a mixed US jobs report showed a dip in wages, clouding the outlook for a Federal Reserve interest rate hike this month.

Though the US economy added a much better-than-expected 242 000 jobs last month and the unemployment rate held at 4.9%, an eight-year low, there was a drop in the average wage and the average hours worked, suggesting remaining slack in the labor market.

"Unfortunately for the US dollar, the mixed nature of the report - especially the wage internals - have prevented a significant rebound" in the US Dollar Index, said Christopher Vecchio at DailyFX in a client note.

While the dollar index "initially reacted positively to the data, the seemingly strong report rang hollow," he said.

The greenback fell 0.5% to $1.1008 per euro and 0.4% against the pound at $1.4233. It edged up to 113.79 yen.

Analysts said they expect the Fed will hold off from raising interest rates at its March 15-16 policy meeting, given signs of slowing US economic growth and the global slowdown.

"Most Federal Reserve officials have their minds made about keeping interest rates unchanged in March and today's jobs report reinforced the need for patience," said Kathy Lien of BK Asset Management.

Lien said there was enough improvement in the jobs report for the Fed to keep a hawkish bias "which should limit the dollar's decline in the coming week especially since there are no major US economic reports on the calendar."

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