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Dollar Flat as Weaker Jobs Report Should Keep Fed Sidelined

Dollar Flat as Weaker Jobs Report Should Keep Fed Sidelined


The U.S. dollar was flat on Friday as data showing the U.S. economy created fewer-than-expected jobs in December did little to suggest the Federal Reserve needs to move off the sidelines.

The U.S. dollar index, which measures the green against a trade-weighted basket of six major currencies, fell by 0.07% to 97.09.

The U.S. created 145,000 jobs last month, undershooting economists’ forecast of 164,000.

The unemployment rate remained unchanged at 3.5%, but wage growth slowed to a pace of 0.1% last month, missing expectations of 0.3%.

Following the weaker-than-expected jobs report, BMO said there was little reason for the Fed to move from the sidelines as the trend of steady job growth, low joblessness and still-subdued wage inflation continued.

GBP/USD and EUR/USD, meanwhile, were also largely flat falling, 0.07% and rising 0.13% respectively.

Cable took a drubbing earlier this week and remains under pressure after Bank of England hinted at more monetary stimulus.

“We estimate that a Bank of England-prompted 50-basis-point widening in the one-year/one-year rate differential might knock 180 pips off cable,” ING said in a note.

USD/CAD was unchanged at C$1.305 as a firmer jobs report from Canada eased concerns about the labor market following November’s, underpinning the loonie.

The Canada jobs report trimmed expectations that the Bank of Canada will cut this year, but RBC said it believes the central bank will still be forced to act to support the economy.

“These were the jobs numbers we were all hoping for following November’s ugly employment report,” RBC said. “But these numbers on their own won’t necessarily keep the Bank of Canada on the sidelines.”

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