NEW YORK- The dollar fell to a three-week low against the yen on Friday after data showed US 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 percent in the 12 months through April, below expectations for a 4.0 percent gain after rising 4.1 percent in March.
The unemployment rate rose to 3.9 percent from 3.8 percent , remaining below 4 percent 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 in Charlotte.
Still, the report itself is unlikely to sway Fed policy unless the trend continues.
“An unemployment rate of 3.9 percent 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 US 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.
