February 1, 2019 / 2:55 PM / 5 months ago

FOREX-Dollar weakens after U.S. wage inflation miss

    * U.S. economy creates 304,000 jobs, dollar briefly rises 
    * U.S. wage inflation up just 0.1 pct, pushes dollar lower
    * Traders reduce rate-cut bets after jobs data
    * Graphic: World FX rates in 2019 tmsnrt.rs/2egbfVh

 (Recasts, adds U.S. jobs data, comment, FX table, updates
prices)
    By Gertrude Chavez-Dreyfuss
    NEW YORK, Feb 1 (Reuters) - The dollar slipped on Friday
after the U.S. non-farm payrolls report for January showed very
little wage inflation, affirming the Federal Reserve's patient
stance on further interest rate increases.
    The greenback did shoot higher after the release of strong
job gains, but quickly got back to its levels before the data,
with analysts citing the average hourly earnings figure, which
rose just 0.1 percent, compared with expectations for a 0.3
percent.
    Beyond the headline jobs gains, the dollar has become more
sensitive to wage inflation over the last year.
    The report showed the U.S. economy created 304,000 new jobs,
the highest in 11 months, superseding forecasts for 165,000
jobs. The unemployment rate, however, rose to a seven-month peak
of 4 percent.
    "We had a knee-jerk rise in the dollar based on the strong
gain in payrolls as well as the overall solid report," said Eric
Viloria, FX strategist at Credit Agricole.
    "But the miss in wages probably reinforces this patient
approach by the Fed and that has restrained the dollar," he
added.
    Contracts tied to the Fed's policy rate had priced out any
chance of a 2019 Fed rate hike after Fed Chairman Jerome Powell
on Wednesday said the case for rate increases had weakened, and
were pricing in about a one-in-three chance of a rate cut by the
end of the year.
    But after the jobs data, traders reduced rate-cut bets,
though they continue to bet against a rate hike.
    In mid-morning trading, the dollar index was down 0.1
percent at 95.508.
    The euro, meanwhile, rose 0.2 percent versus the dollar to
$1.1471, while the dollar gained 0.2 percent against the
yen to 109.02 yen.
    Broader risk sentiment remained somewhat robust after a top
U.S. negotiator on Thursday reported "substantial progress" in
two days of high-level talks on trade with China.
    The dollar is widely expected to weaken this year as the
Federal Reserve turns more cautious about rate increases.
    "The outlook for U.S. assets remains relatively uncompelling
and investors should be shopping for value elsewhere," said Hans
Redeker, global head of currency strategy at Morgan Stanley in
London.
    "A weak U.S. equity market outlook should keep low-yielders
such as the yen and the Swedish crown supported," he added.
    
    ========================================================
    Currency bid prices at 9:39 AM (1439 GMT)
 Description      RIC         Last           U.S. Close  Pct Change     YTD Pct     High Bid    Low Bid
                                              Previous                   Change                 
                                              Session                                           
 Euro/Dollar      EUR=        $1.1472        $1.1444     +0.24%         +0.03%      +1.1486     +1.1434
 Dollar/Yen       JPY=        109.0200       108.8700    +0.14%         -1.12%      +109.0700   +108.7300
 Euro/Yen         EURJPY=     125.06         124.62      +0.35%         -0.92%      +125.1300   +124.3700
 Dollar/Swiss     CHF=        0.9938         0.9940      -0.02%         +1.26%      +0.9957     +0.9922
 Sterling/Dollar  GBP=        1.3080         1.3100      -0.15%         +2.53%      +1.3114     +1.3044
 Dollar/Canadian  CAD=        1.3102         1.3122      -0.15%         -3.91%      +1.3158     +1.3100
 Australian/Doll  AUD=        0.7263         0.7272      -0.12%         +3.04%      +0.7284     +0.7237
 ar                                                                                             
 Euro/Swiss       EURCHF=     1.1401         1.1378      +0.20%         +1.31%      +1.1404     +1.1377
 Euro/Sterling    EURGBP=     0.8767         0.8731      +0.41%         -2.42%      +0.8794     +0.8726
 NZ               NZD=        0.6918         0.6916      +0.03%         +2.99%      +0.6941     +0.6899
 Dollar/Dollar                                                                                  
 Dollar/Norway    NOK=        8.4166         8.4301      -0.16%         -2.57%      +8.4535     +8.4068
 Euro/Norway      EURNOK=     9.6563         9.6502      +0.06%         -2.52%      +9.6742     +9.6487
 Dollar/Sweden    SEK=        9.0434         9.0465      +0.17%         +0.89%      +9.0601     +9.0372
 Euro/Sweden      EURSEK=     10.3755        10.3574     +0.17%         +1.09%      +10.3921    +10.3485
 
 (Reporting by Gertrude Chavez-Dreyfuss
Additional reporting Tom Finn in London
Editing by Frances Kerry)
  
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