NEW YORK – The dollar gave back earlier gains against the euro but stayed stronger against the yen after jobs gains and wage growth for April beat economists’ forecasts but showed downward jobs revisions for March.
Employers added 253,000 jobs, beating economists’ forecasts for a 180,000 gain. US average hourly earnings rose at an annual rate of 4.4 percent, above expectations for a 4.2 percent increase.
But data for March was also revised lower to show 165,000 jobs added instead of 236,000 as previously reported.
“The headline number is probably not as strong as it looks given the backward revisions,” said Vassili Serebriakov, an FX strategist at UBS in New York.
The initial move up in the greenback was likely in part due to investors who were short the currency, or betting it would fall, covering their positions, he added.
The dollar has fallen from a 20-year high last September as investors adjust for the likelihood that the Federal Reserve is at or near the end of its tightening cycle, while peers including the European Central Bank have gotten more hawkish.
Investors are pricing in the likelihood that the Fed will cut rates in the second half of this year. However, while the economy is slowing, there are still pockets of strength, which is making investors hesitant to get too much more bearish on the US currency for now.
“In the near term it’s hard to get a lot of momentum until we have a more clear directional signal from US data,” said Serebriakov. “For us the resolution ultimately is for consistently weaker US data and a weaker dollar ultimately and a more dovish Fed.” – Reuters
