(New York) The dollar fell precipitously against major currencies on Friday, as US jobs data for December pointed to a slowdown in US wage growth.
This unexpected news eases inflationary pressures and opens the door to an easing of the Federal Reserve’s (Fed) tight monetary policy.
Around 3 p.m. (ET), the greenback was down 1.17% to $1.0645 per euro, after hitting a near-month high of 1.0497 before the report was released. dollar.
The American currency also yielded 1.56% to 1.2094 dollars for a pound after having climbed to a peak since November at 1.1851 dollars.
The US unemployment rate fell, falling in December to 3.5%, its February 2019 level, just before the pandemic, which it had already found several times this year, the US Department of Labor announced on Friday.
On the other hand, the increase in the average hourly wage slowed: +4.6% compared to December 2021, against +4.8% in November, after peaking at 5.6% in March. And the increase compared to the previous month is 0.3%, against 0.4% in November.
“There couldn’t be a more perfect jobs report: more hiring, but at the same time wage growth is moderating, helping to revitalize optimism around a soft landing in economy,” Christopher Vecchio of Tastylive told AFP.
“Any sign that the Fed doesn’t need to raise rates as sharply as the market fears is going to be interpreted as good news for risky assets, stocks” as Wall Street climbed on Friday, “and a bad news for the dollar,” the analyst further explained.
Those of BNP Paribas also believe that the trend is slowing, this “could therefore reassure the members of the Fed who fear that a tight job market will increase the cycle of wage and price increases”.
Another sign of a slowdown, economic activity in services contracted in December in the United States for the first time since May 2020, according to the index of the professional federation ISM.
Fed officials say for now that their rate hikes will continue and that a cut is not yet on the horizon in 2023.
But the market expects an easing caused by the weakness of the US economy, which risks sinking into recession.
“A lower increase in wages should be reflected in an increase in prices, as companies will be less inclined to raise their prices to pay higher wages,” said Mike Fratantoni, chief economist of the Mortgage Bankers Association.
However, he did not think “that the Fed will change monetary policy quickly”. “We expect a 25 basis point hike at the next monetary meeting” from 1er February, he said.