Investing.com - The dollar weakened against the other major currencies on Friday as a mixed U.S. jobs report for February dampened expectations that the Federal Reserve would raise interest rates again in the near term.
The Labor Department reported that the U.S. economy added 242,000 new jobs last month, easily outstripping forecasts for wage growth of 190,000.
The unemployment rate held steady at an eight-year low of 4.9%, in line with forecasts.
But average hourly earnings fell by 0.1% during February, reversing the 0.5% rise seen in January. The drop in average earnings lowered the year-on-year gain in earnings to 2.2% from 2.5% in January.
The weak wage numbers indicated that consumer inflation is likely to remain muted. Fed policymakers are watching inflation closely as they try to determine when to raise rates again.
Higher interest rates would boost the dollar by making it more attractive to yield-seeking investors.
The U.S. dollar index, which measures the greenback’s strength against a trade-weighted basket of six major currencies, slid to two-week lows of 97.03 before settling at 97.34. The index ended the week down 0.85%.
The euro rose to one week highs against the dollar, with EUR/USD hitting 1.1043, before pulling back to 1.1004 in late trade, up 0.45% for the day.
The dollar ended the day little changed against the yen, with USD/JPY at 113.76.
The greenback hit one-week lows against the Swiss franc in the immediate aftermath of the jobs report, before bouncing back, with USD/CHF at 0.9928 late Friday.
The commodity linked currencies posted strong gains, amid a rally in commodity prices.
The Australian and New Zealand dollars both rose more than 1%, while the Canadian dollar rose to three-month highs as solid domestic trade data was seen as lessening the chances of a rate cut.
In the week ahead, investors will be focusing on Thursday’s European Central Bank meeting after the bank disappointed expectations with a smaller-than-expected stimulus move at its December meeting.
Central bank meetings in Canada and New Zealand will also be closely watched.
Investors will also be zoning in on inflation and trade data from China amid concerns that the world’s number-to economy is heading for a hard landing.
Ahead of the coming week, Investing.com has compiled a list of these and other significant events likely to affect the markets.
Monday, March 7
Germany is to release data on factory orders.
The Swiss National Bank is to publish data on its foreign currency reserves.
The Eurogroup of euro zone finance ministers are to hold talks in Brussels.
Federal Reserve Governors Lael Brainard and Stanley Fischer are both due to speak at an event in Washington.
Tuesday, March 8
Japan is to release revised data on first quarter gross domestic product.
China is to publish a report on the trade balance.
Bank of England Governor Mark Carney is to testify on Britain’s European Union membership before the Parliamentary Committee in London.
Canada is to release data on building permits.
Wednesday, March 9
Australia is to produce private sector data on consumer sentiment as well as official data on home loans.
The U.K. is to report on industrial and manufacturing production.
The Bank of Canada is to announce its benchmark interest rate and publish its rate statement, which outlines economic conditions and the factors affecting the monetary policy decision.
Thursday, March 10
The Reserve Bank of New Zealand is to announce its benchmark interest rate and hold a press conference to discuss the monetary policy decision.
China is to release data on consumer price inflation.
The ECB is to announce its monetary policy decision. The rate announcement will be followed by a post-policy meeting press conference with President Mario Draghi.
The U.S. is to release the weekly report on initial jobless claims.
Friday, March 11
The U.K. is to release data on the trade balance.
Canada is to release its employment report for February.
The U.S. is to round up the week with data on import prices.