US dollar tumbles to six-week low after soft jobs data

By Gertrude Chavez-Dreyfuss

NEW YORK (Reuters) - The dollar fell to a six-week low on Friday after data showed the world's largest economy created fewer jobs than expected last month, reinforcing expectations the Federal Reserve is likely to hold interest rates steady again at its December meeting.

The dollar index, a gauge of the greenback's value against six major currencies, dropped 1.1% to 105.03, after earlier sinking to 104.93, its lowest since Sept. 20. The index was on track for its largest one-day fall since July.

For the week, the greenback was down 1.4%, on pace for its worst weekly performance since July as well.

Data showed nonfarm payrolls increased by 150,000 jobs last month. The numbers for September were revised lower to show 297,000 jobs created instead of 336,000 as previously reported.

"From my view, the Fed rate hike cycle is over and this reaffirms the view that the Fed should not hike rates again," said Ronald Temple, chief market strategist at Lazard (NYSE:LAZ) in New York.

"If you look at the new jobs, 150,000 versus 180,000 expected - that is still a strong jobs-creation number, but more in line with what the U.S. economy needs relative to population growth and the stable unemployment rates. That is a Goldilocks number," he said, suggesting it was ideal for the economy.

Against the yen, the dollar fell to a two-week low of 149.18, and was last down 0.8% at 149.315 yen, capping a whirlwind week, in which the Japanese currency touched a one-year low against the dollar and 15-year trough against the euro.

On the week, the dollar was down 0.2% versus the yen, its biggest weekly loss since late July.

The drop in the yen earlier in the week came after the Bank of Japan tweaked its yield curve control policy on Tuesday, but not by as much as markets had expected.

Kazuo Ueda, the central bank's governor, will continue to dismantle its ultra-loose monetary policy and look to exit the decade-long accommodative regime next year, Reuters reported on Thursday, according to six sources familiar with the central bank's thinking.

Another piece of economic data released on Friday also depicted a slowing economy.

The U.S. services sector slowed for a second straight month in October, according to the Institute for Supply Management (ISM). Its non-manufacturing PMI dropped to a five-month low of 51.8 from 53.6 in September. The Services PMI has been declining since August, when it rose to the highest level in six months.

In other currencies, the euro was last up 1.1% at $1.0735, and thanks to gains earlier in the week was headed for a weekly gain of 1.6%, the largest in four months. Sterling rose 1.5% versus the dollar to $1.2381, after earlier hitting a six-week high of $1.2389. The British pound posted its best daily performance since January.

It is also set for a weekly gain of 2.4%, the biggest since November 2022.

The dollar's fall mirrors a decline in U.S. Treasury yields. The benchmark U.S. 10-year yield slid to a five-week low of 4.484%, and headed for a more than 30 basis-point retreat, its most since March 2020. This week's fall was sparked by a combination of the U.S. Treasury Department announcing smaller-than-expected increases in longer-dated Treasury supply, and Fed Chair Jerome Powell seemingly less hawkish than markets expected at his press conference after the Fed's Wednesday meeting. He did, however, leave the door open to a further increase in borrowing costs in a nod to the economy's resilience.

Post-jobs and services sector data, markets are now pricing in a less than 5% chance of a rate increase in December, compared with nearly 20% late on Thursday, according to the CME's FedWatch tool.

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Currency bid prices at 3:00PM (1900 GMT)

Description RIC Last U.S. Close Pct Change YTD Pct High Bid Low Bid

Previous Change

Session

Dollar index 104.9900 106.2000 -1.12% 1.449% +106.2200 +104.9300

Euro/Dollar $1.0736 $1.0623 +1.06% +0.19% +$1.0747 +$1.0616

Dollar/Yen 149.3100 150.4700 -0.77% +13.88% +150.5150 +149.1800

Euro/Yen 160.30 159.79 +0.32% +14.26% +160.4000 +159.6100

Dollar/Swiss 0.8980 0.9060 -0.88% -2.89% +0.9074 +0.8966

Sterling/Dollar $1.2381 $1.2202 +1.47% +2.38% +$1.2389 +$1.2185

Dollar/Canadian 1.3659 1.3738 -0.56% +0.82% +1.3760 +1.3656

Aussie/Dollar $0.6516 $0.6434 +1.27% -4.41% +$0.6518 +$0.6420

Euro/Swiss 0.9640 0.9623 +0.18% -2.58% +0.9647 +0.9616

Euro/Sterling 0.8671 0.8703 -0.37% -1.96% +0.8721 +0.8667

NZ $0.5995 $0.5894 +1.71% -5.58% +$0.6000 +$0.5885

Dollar/Dollar

Dollar/Norway 11.0250 11.1590 -1.16% +12.39% +11.1790 +11.0300

Euro/Norway 11.8400 11.8470 -0.06% +12.81% +11.9021 +11.8350

Dollar/Sweden 10.8756 11.1063 -1.03% +4.49% +11.1230 +10.8706

Euro/Sweden 11.6768 11.7983 -1.03% +4.73% +11.8115 +11.6730