Dollar prices sagged on Monday as bond yields extended their decline after a U.S. jobs report showed wage growth lose momentum even as employment increased.
The closely watched data released on Friday showed nonfarm payrolls rose by a solid 196,000 in March, topping expectations and giving riskier assets a much-needed lift.
However, other components of the U.S. employment report suggested the economy wasn’t firing on all cylinders.
Wage gains slowed in March, with average hourly earnings rising a modest 0.1 percent after jumping 0.4 percent in February.
Treasury yields slipped and weighed on the dollar as the moderation in wage growth supported the Federal Reserve’s decision to suspend further interest rate increases this year.
The dollar index against a basket of six major currencies inched down 0.15 percent to 97.253, retracing Friday’s modest gains.
“The Fed can neither cut or hike rates in light of Friday’s jobs report, which does not provide the dollar with decisive incentive,” said Yukio Ishizuki, senior currency strategist at Daiwa Securities.
“The Sino-U.S. trade talks don’t look to end any time soon and market focus will drift to Europe this week, as Brexit nears its next milestone on April 12.”
U.S. and Chinese negotiators wrapped up their latest round of trade talks on Friday and were scheduled to resume discussions next week to try to secure a pact that would end a months-long tit-for-tat tariff battle.
Britain’s departure from the European Union looms on April 12, but Prime Minister Theresa May has asked Brussels to postpone the exit until June 30 with little progress being made towards the departure.
The pound slipped to a one-week low of $1.2987 on Friday as France and the Netherlands expressed doubt about May’s plan to further delay Brexit.
Sterling last traded at $1.3069 for a gain of 0.25 percent.
The euro added 0.1 percent to $1.1230 after dipping slightly against the dollar on Friday.
The dollar was 0.3 percent lower at 111.385 yen after briefly popping up to a three-week high of 111.825 on Friday following the U.S. jobs report.
“The dollar is making little headway as further gains by equities is likely to be sluggish under current economic conditions, in turn preventing a rise by U.S. yields,” said Koji Fukaya, president of FPG Securities in Tokyo.
The 10-year Treasury note stretched Friday’s fall and slipped to 2.49 percent, pulling further back from a two-week high of 2.54 percent scaled late last week.
The Australian dollar dipped 0.15 percent to $0.7095 in the wake of declining prices of commodities such as copper.
Source: Reuters
