50% Off! Beat the market in 2025 with InvestingProCLAIM SALE

Dollar drops as employers add fewer jobs than expected in April

Published 05/02/2024, 08:26 PM
Updated 05/03/2024, 03:25 PM
© Reuters. FILE PHOTO: Japanese yen and U.S. dollar banknotes are seen with a currency exchange rate graph in this illustration picture taken June 16, 2022. REUTERS/Florence Lo/Illustration/File Photo
EUR/USD
-
USD/JPY
-
DX
-
BTC/USD
-

By Karen Brettell

NEW YORK (Reuters) - The dollar fell to a three-week low against the yen on Friday after data showed U.S. jobs growth slowed more than expected in April and annual wage gains cooled, boosting bets that the Federal Reserve will cut rates twice this year.

Employers added 175,000 jobs last month, below economists' expectations for a 243,000 increase. Wages increased 3.9% in the 12 months through April, below expectations for a 4.0% gain after rising 4.1% in March.

The unemployment rate rose to 3.9% from 3.8%, remaining below 4% for the 27th straight month.

"The data's soft across the board from the Fed's perspective," said Jason Pride, chief of investment strategy and research at Glenmede in Philadelphia.

Fed funds futures traders raised bets that the Fed would cut 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 so hoping that the Fed can cut rates this year and did not want one of the hot numbers coming in. Today's report certainly offers them a cooler read of the labor landscape," said Quincy Krosby, chief global strategist at LPL Financial (NASDAQ:LPLA) in Charlotte.

Still, the report itself is unlikely to sway Fed policy unless the trend continues.

"An unemployment rate of 3.9% is not something disastrous. This indicates an economy that is not declining dramatically, but it definitely indicates a looser labor market," said Pride. "It gives the Fed some hope, but it does not establish the trend for them."

The Fed said after its two-day meeting on Wednesday that sticky inflation meant that it would take longer to cut rates.

Inflation should continue to decline even as the U.S. central bank holds its benchmark interest rate at current levels, Fed Governor Michelle Bowman said on Friday while reiterating her willingness to raise the policy rate if progress peters out or reverses.

The jobs report showed "solid" growth that slowed to a point that could make Fed officials more confident the economy is not overheating, Chicago Fed President Austan Goolsbee said on Friday.

Other data on Friday showed the U.S. services sector contracted in March, while a measure of prices paid by businesses for inputs jumped, a worrisome sign for the inflation outlook.

The dollar index was last down 0.27% at 105.03 after reaching 104.52, the lowest since April 10. The euro gained 0.39% to $1.0766.

The greenback weakened 0.48% to 152.9 Japanese yen, reaching as low as 151.86, the weakest since April 10.

The yen surged in light trading late on Wednesday and on Monday, which traders and analysts attributed to intervention by Japanese authorities.

Japanese Finance Minister Shunichi Suzuki said on Friday that authorities may need to smooth any excessive yen moves that hurt households and companies.

The yen is on track for its best weekly percentage gain against the greenback since November 2022, after Japanese authorities also intervened in October 2022 to shore up the currency.

© Reuters. U.S. Dollar banknote is seen in this illustration taken July 17, 2022. REUTERS/Dado Ruvic/Illustration/File Photo

The yen reached a 34-year low of 160.245 on Monday as it suffers from a wide interest rate differential with the dollar.

In cryptocurrencies, bitcoin gained 5.30% to $61,828.

Latest comments

Risk Disclosure: Trading in financial instruments and/or cryptocurrencies involves high risks including the risk of losing some, or all, of your investment amount, and may not be suitable for all investors. Prices of cryptocurrencies are extremely volatile and may be affected by external factors such as financial, regulatory or political events. Trading on margin increases the financial risks.
Before deciding to trade in financial instrument or cryptocurrencies you should be fully informed of the risks and costs associated with trading the financial markets, carefully consider your investment objectives, level of experience, and risk appetite, and seek professional advice where needed.
Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. The data and prices on the website are not necessarily provided by any market or exchange, but may be provided by market makers, and so prices may not be accurate and may differ from the actual price at any given market, meaning prices are indicative and not appropriate for trading purposes. Fusion Media and any provider of the data contained in this website will not accept liability for any loss or damage as a result of your trading, or your reliance on the information contained within this website.
It is prohibited to use, store, reproduce, display, modify, transmit or distribute the data contained in this website without the explicit prior written permission of Fusion Media and/or the data provider. All intellectual property rights are reserved by the providers and/or the exchange providing the data contained in this website.
Fusion Media may be compensated by the advertisers that appear on the website, based on your interaction with the advertisements or advertisers.
© 2007-2024 - Fusion Media Limited. All Rights Reserved.