Investing.com - The dollar fell against the yen on Friday after the latest U.S. jobs report showed that average earnings fell last month, suggesting that the Federal Reserve could keep rates on hold for longer.
The U.S. economy added 252,000 jobs in December the Labor Department said, more than the 240,000 forecast by economists. The unemployment rate ticked down to a six-and-a-half year low 5.6% from 5.8% in November. Economists had forecast a decline to 5.7%.
However, the report also showed that average earnings fell by 0.2% in December, missing expectations for a 0.2% increase and were up by just 1.7% from a year earlier.
The drop in average earnings prompted investors to take profits in the dollar, as markets pushed back expectations for the first hike in U.S. interest rates to late-2015 from mid-2015 before the report.
Following an initial move higher the dollar fell against the yen, with USD/JPY down 0.99% to 118.46 late Friday. The pair ended the week down 1.6%.
The U.S. dollar index, which measures the greenback’s strength against a trade-weighted basket of six major currencies, was down 0.39% to 92.18 late Friday, off the 12-year peaks of 92.76 reached in the previous session. The index still notched up a weekly gain, supported by weakness in the euro.
The euro ended the week at more than two-month lows against the yen, with EUR/JPY down 0.57% to 140.32 in late trade, the weakest since October 31.
In the euro zone, data on Friday showed that industrial output fell in both Germany and France in November, while German exports also fell. The weak data fuelled speculation that the European Central Bank will embark on full blown quantitative easing as soon as its next meeting on January 22.
Earlier in the week, data showed that consumer prices in the euro area fell in December for the first time in more than five years, adding to pressure on the ECB to step up measures to avert the threat of deflation taking hold in the region.
The single currency was also pressured lower by uncertainty over Greece’s future in the euro zone if far-left anti-austerity party Syriza win elections due to be held later this month.
In the week ahead, the economic calendar is light, but markets will be looking ahead to Wednesday’s report on U.S. retail sales, as well as Friday’s data on consumer sentiment and factory output.
Ahead of the coming week, Investing.com has compiled a list of these and other significant events likely to affect the markets.
Monday, January 12
In the U.S., Atlanta Federal Reserve President Dennis Lockhart is to speak.
Tuesday, January 13
Japan is to produce data on the current account.
Wednesday, January 14
The U.S. is to produce data on retail sales, in addition to reports on import prices and business inventories.
Thursday, January 15
The U.S. is to publish the weekly report on initial jobless claims as well as data on producer prices and manufacturing activity in the Philadelphia region.
Friday, January 16
Japan is to release data on tertiary industry activity.
The U.S. is to round up the week with a report on industrial production and preliminary data on consumer sentiment.