October 5, 2018 / 6:30 PM / in 18 days

FOREX-Dollar weakens after data shows U.S. wage gains were modest

    * Annual wage growth dropped in September
    * Bond market closed on Monday for Columbus Day

 (Adds quotes, updates prices)
    By Karen Brettell
    NEW YORK, Oct 5 (Reuters) - The U.S. dollar weakened on
Friday after data for September showed jobs gains that fell
short of expectations while wages increases slowed on an
annualized basis during the month, easing concerns about a large
run-up in inflation.
    Nonfarm payrolls increased by 134,000 jobs last month, the
fewest in a year, though data for July and August was revised to
show 87,000 more jobs added than previously reported.
    Average hourly earnings increased eight cents, or 0.3
percent, in September after rising 0.3 percent in the prior
month. With September's increase below the 0.5 percent gain
notched during the same period last year, that lowered the
annual increase in wages to 2.8 percent from 2.9 percent in
August, which was the biggest rise in more than nine years.
    “Wage inflation is creeping higher, but it has not
accelerated as the market was fearing,” said Russell Price,
senior economist at Ameriprise Financial Services in Troy,
Michigan.
    Investors have been watching for indications that wages may
rise at a faster pace as companies, including Amazon,
raise minimum wages.
    Still, the data was seen as solid and supportive of the
Federal Reserve continuing to tighten monetary policy.
    "There is no material slowdown in the U.S. economy. These
numbers will confirm the Fed remains on track for steady rate
hikes," said Paresh Upadhyaya, director of currency strategy at
Amundi Pioneer Asset Management in Boston.
    The dollar reversed direction several times before settling
at lower levels after the data. The dollar index fell as
low as 95.516, from around 95.770 before the data, before rising
back to 95.678.
    Hawkish Fed speakers and strong U.S. economic growth have
supported the greenback in recent weeks. A dramatic surge in
Treasury yields this week that may attract investors seeking
higher returns is also seen as positive for the U.S. currency.
    “Certainly these higher yields are giving a better bid to
the U.S. dollar across the board,” said Dean Popplewell, chief
currency strategist at Oanda in Toronto.
    Given recent strength, investors are also likely to be
cautious about being short the U.S. currency before a long
weekend, Popplewell said, adding that “there is good demand for
U.S. dollars definitely on pullbacks.”
    The U.S. bond market will be closed on Monday for the
Columbus Day holiday though stock markets are open.
    
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    Currency bid prices at 2:20PM (1820 GMT)
 Description      RIC         Last           U.S. Close  Pct Change     YTD Pct     High Bid    Low Bid
                                              Previous                   Change                 
                                              Session                                           
 Euro/Dollar      EUR=        $1.1516        $1.1513     +0.03%         -4.00%      +1.1549     +1.1485
 Dollar/Yen       JPY=        113.7800       113.9000    -0.11%         +0.99%      +114.0900   +113.5700
 Euro/Yen         EURJPY=     131.08         131.15      -0.05%         -3.03%      +131.4100   +130.6200
 Dollar/Swiss     CHF=        0.9922         0.9916      +0.06%         +1.84%      +0.9955     +0.9911
 Sterling/Dollar  GBP=        1.3101         1.3018      +0.64%         -3.04%      +1.3122     +1.3004
 Dollar/Canadian  CAD=        1.2942         1.2923      +0.15%         +2.90%      +1.2954     +1.2895
 Australian/Doll  AUD=        0.7047         0.7072      -0.35%         -9.67%      +0.7087     +0.7043
 ar                                                                                             
 Euro/Swiss       EURCHF=     1.1429         1.1417      +0.11%         -2.22%      +1.1448     +1.1412
 Euro/Sterling    EURGBP=     0.8791         0.8841      -0.57%         -1.04%      +0.8848     +0.8778
 NZ               NZD=        0.6435         0.6478      -0.66%         -9.19%      +0.6485     +0.6433
 Dollar/Dollar                                                                                  
 Dollar/Norway    NOK=        8.2602         8.2474      +0.16%         +0.65%      +8.2897     +8.2381
 Euro/Norway      EURNOK=     9.5174         9.4987      +0.20%         -3.36%      +9.5277     +9.4850
 Dollar/Sweden    SEK=        9.0687         9.0577      +0.16%         +10.57%     +9.1003     +9.0406
 Euro/Sweden      EURSEK=     10.4476        10.4314     +0.16%         +6.18%      +10.4600    +10.4190
 

 (Additional reporting by Herb Lash and Richard Leong)
  
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