An positive but slowing U.S. jobs report is helping keep the dollar high against a basket of other global currencies this morning as the trading week kicks off. According to the most recent U.S. jobs report, wage growth showed improvement in January, rekindling hopes that the economic environment is conducive for a rate hike by the Federal Reserve this year.
The U.S. Department of Labor posted a 0.5% rise in average hourly earnings in January, signifying a 2.5% increase year-over-year. A total of 151,000 jobs were created in the past month, which came 39,000 lower than projections of a survey of economists. However, subdued job growth did not impact the unemployment rate, which fell to 4.9%. The data fueled hopes, or perhaps fears, of a possible rate hike this year.
The euro is trading down against the dollar slightly by 0.04% to 1.1151. In the Eurozone, market participants will watch for Germany’s industrial production data to assess the direction of the economy. Fourth-quarter preliminary growth data will also be a key number ahead in the week.
Chinese New Year
At the same time, developments in Chinese markets will be limited as China remains closed throughout the week due to the beginning of the Lunar New Year. As per the data released last week, China’s foreign reserves declined by nearly $100 billion for the third month in a row. USD stands at 6.5739 against the Yuan today.
Meanwhile, a weaker current account scenario has put pressure on the Japanese Yen, which lost momentum against the dollar. The dollar rallied by nearly 0.22% to 117.15 today after average wages in Japan grew by 0.1% year-on-year. The lack of recovery in wages coupled with inflating prices of basic commodities is preventing consumers from spending more, which is likely to negatively impact the Bank of Japan’s target of achieving 2% inflation.
Like other currencies, GBP too shed gains and was trading 0.08% lower at 1.4489. The U.S. Dollar Index for March delivery remained up by 0.05% to 97.03 as of today.