Investing.com - The dollar fell against the euro and the other major currencies on Friday after data pointing to sluggish U.S. wage growth tempered expectations for a rate hike in the coming months.
The Department of Labor reported that the U.S. employment-cost index, a measure of workers’ wages and benefits, rose just 0.2% in the second quarter. It was the smallest quarterly increase since records began in 1982 and was well below economists’ expectations of a 0.6% increase.
The unexpectedly weak data prompted investors to push back expectations on the timing of an initial hike in short term interest rates.
The euro rebounded following the data, with EUR/USD rising to 1.0984 in late trade, up 0.47% for the day. For the month the pair lost 1.17%.
The dollar was also lower against the yen, with USD/JPY down 0.23% to 123.84 late Friday, off Thursday’s seven-week peaks of 124.57 and pairing monthly gains to 0.85%.
The U.S. dollar index, which measures the greenback’s strength against a trade-weighted basket of six major currencies, settled at 0.30% to 97.32 late Friday after falling as low as 96.38. The index still ended the month with gains of 1.86%.
The dollar had strengthened earlier in the week after the Federal Reserve indicated that interest rates could rise in the coming months, possibly as early as September, and after data showing U.S. economic growth accelerated in the second quarter.
The U.S. economy expanded at an annual rate of 2.3% in the three months to June the Commerce Department said Thursday. First quarter growth was revised up to 0.6% from a previously reported contraction of 0.2%.
Meanwhile, the dollar was lower against the pound and the Swiss franc, with GBP/USD adding 0.17% to trade at 1.5627 and USD/CHF slipping 0.23% to 0.9670.
The Australian dollar pushed higher against the softer greenback, with AUD/USD rising 0.21% to 0.7308, trimming the month’s losses to 2.69%.
Volatility in Chinese equity markets pressured the Aussie to six-year lows last month, because of the country’s strong trade links to China.
In the week ahead, investors will be turning their attention to the latest U.S. employment report, which could reinforce expectations for higher interest rates.
Market participants will also be awaiting surveys of manufacturing and service sector data from the U.S., the U.K. and China.
Ahead of the coming week, Investing.com has compiled a list of these and other significant events likely to affect the markets.
Monday, August 3
China is to release revised data on manufacturing activity.
The U.K. is to publish its manufacturing index.
Markets in Canada are to remain closed for a national holiday.
The U.S. is to release data on personal income and expenditure.
The Institute of Supply Management is to release data on manufacturing activity.
Tuesday, August 4
The Reserve Bank of Australia is to announce its benchmark interest rate and publish its rate statement, which outlines economic conditions and the factors affecting the monetary policy decision.
Australia is also to release data on retail sales and the trade balance.
The U.K. is to release its construction index.
The U.S. is to report on factory orders.
Wednesday, August 5
New Zealand is to release its quarterly unemployment report.
China is to release a report on service sector activity.
The U.K. is to release its closely watched report on service sector activity.
The U.S. is to release the ADP report on private sector hiring.
Meanwhile, both the U.S. and Canada are to publish data on the trade balance.
Later in the day the ISM is to release data on service sector activity.
Thursday, August 6
Australia is to publish its latest unemployment report.
Germany is to release data on factory orders.
Switzerland is to produce data on consumer price inflation.
The U.K. is to publish a report on industrial production. Later in the day, the Bank of England is to announce its benchmark interest rate and publish its quarterly inflation report. Governor Mark Carney is to hold a press conference about the report.
Friday, August 7
The RBA is to publish its monetary policy statement.
The Bank of Japan is to announce its benchmark interest rate and publish its rate statement. There will be a closely watched press conference following the rate announcement.
The Swiss National Bank is to publish data on its foreign currency reserves. This data is closely scrutinized for indications of the size of the bank’s operations in currency markets.
Canada is to release data on building permits as well as the employment report.
The U.S. is to round up the week with the closely watched government report on nonfarm payrolls.