NEW YORK (Reuters) – The dollar dropped on Friday after data showed a mixed view on the economy, and as optimism that the United States and China will reach a deal to end their trade war reduced safe-haven demand for the greenback.
FILE PHOTO: A U.S. Dollar note is seen in this June 22, 2017 illustration photo. REUTERS/Thomas White/ The dollar initially gained after U.S. jobs growth slowed less than expected in October, while wages gained and hiring in the prior two months was stronger than previously estimated.
«The data is much better than expected. Markets were braced, certainly in headline terms, for some much weaker numbers given the expected impact from the GM strike and the census hiring. So very good data in that context,» said Shaun Osborne, chief foreign exchange strategist at Scotiabank in Toronto.
Striking workers who do not receive a paycheck during the payrolls survey period are treated as unemployed. The strike by about 46,000 workers at GM plants in Michigan and Kentucky ended last Friday.
Temporary census workers also left their jobs during the month.
The U.S. currency was unable to hold onto the gains, however, and was further dented after the Institute for Supply Management (ISM) said its index of national factory activity fell below economists’ expectations.
The dollar index against a basket of six major currencies .DXY was last 97.22, down 0.13% on the day. It earlier rose to 97.45 on the jobs data.
The dollar has weakened since the Federal Reserve on Wednesday cut interest rates for the third time this year, and indicated that further reductions may not be forthcoming.
Concerns about a slowing American economy is weighing on the greenback, with the U.S. central bank expected to resume rate cuts if the economic data worsens.
«There is a bit more vulnerability starting to feed into the dollar with perhaps the U.S. economy slowing down,» Osborne said.
Fed Vice Chair Richard Clarida said on Friday that the rate cuts put into effect leave the U.S. economy better armed to withstand the risks of a global slowdown.
Safe-haven flows into the U.S. currency have also weakened on optimism that the United States and China are close to reaching a deal to end their trade war, which has been blamed for slowing global growth.
The initial «phase one» trade pact with China appears to be in good shape and is likely to be signed around mid-November, although a finite date is still in question, U.S. Commerce Secretary Wilbur Ross said on Friday.
Reporting by Karen Brettell; Editing by Chizu Nomiyama and Jonathan Oatis
LINK ORIGINAL: Reuters