The dollar fell to a three-week low against the yen on Friday, after data showed that US job growth slowed more than expected in April and annual wage gains fell, raising bets that the US Federal Reserve will cut interest rates twice this year.
Employers added 175,000 jobs last month, less than economists expected an increase of 243,000. Wages rose 3.9 percent in the 12 months including April, after rising 4.1 percent in March.
The unemployment rate increased to 3.9 percent from 3.8 percent, remaining below four percent for 27 consecutive months.
“The data is weak across the board from the Fed’s perspective,” said Jason Pride, head of investment strategy and research at Glenmede in Philadelphia.
Federal Funds futures traders have raised their bets that the Federal Reserve will cut interest rates twice this year, with current bets on a 49 basis point cut, up from 42 basis points before the data.
But the report itself is unlikely to influence Fed policy unless this trend continues.
“The unemployment rate of 3.9 percent is not catastrophic,” Pride said. “This indicates an economy that is not in severe decline, but it certainly indicates a less active labor market… This gives the Fed some hope, but it does not determine the direction for it.”
The dollar index fell 0.51 percent throughout the day to 104.76 after earlier reaching 104.52, the lowest level since April 10. The euro rose 0.57 percent to $1.0786.
The US currency fell 0.77 percent against its Japanese counterpart to 152.44 yen and reached the level of 151.86, the lowest since April 10.
The Japanese currency is on track to achieve the best weekly percentage gain against the dollar since November 2022, after the authorities also intervened in October 2022 to support the currency.
Japanese officials are trying to lift the yen from its lowest levels in 34 years, as it suffers from a large difference in interest rates with the United States.
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