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US Dollar Falls on Weak Jobs Report, Capped by Strong Consumer Sentiment

December 7, 2018 at 15:46 by Andrew Moran

The US dollar is tumbling at the end of the trading week as a new jobs report was weaker than expected. The greenback’s losses were capped on a new survey that found consumer sentiment remains strong. With the equities markets in shambles, and the Federal Reserve behaving in a dovish manner, it is possible that the buck’s 2018 ascent may crumble heading into 2019.

According to the Bureau of Labor Statistics (BLS), the US economy added 155,000 new jobs in November, keeping the unemployment rate at a 49-year low of 3.7% for the third consecutive month. The market had forecast an increase of 190,000 jobs.

Workers are benefiting from experiencing the fastest pay gains in nine years. Last month, the average worker’s earnings rose six cents to $27.35 per hour. However, the jump in pay over the last 12 months was flat at 3.1%. Still, it is the biggest increase since 2009.

The biggest jobs gains were found in healthcare (32,000), professional services (32,000), manufacturing (27,000), transportation (25,000), and retail (18,000). Energy, mining, and government all shed jobs.

Overall, the US has added about 206,000 jobs per month so far this year, beating the 182,000 pace in 2017.

In other data, the University of Michigan reported that its consumer-sentiment index was unchanged at 97.5 in December, beating market estimates of 97.3. For two straight years, the index has maintained most of the gains from upbeat consumers. While consumers are optimistic about the present, they are not as enthusiastic about the future, researchers warn.

Equities markets are plunging to close off the trading week as investors believe the Federal Reserve is signalling to pause on raising interest rates in 2019. The US central bank is anticipated to pull the trigger on a rate hike this month, but after Fed Chair Jerome Powell noted that rates were nearing neutral levels, traders took that as a sign that a slowdown in rate hikes is nigh.

The USD/CAD currency pair tumbled 0.82% to 1.3274, from an opening of 1.3382, at 14:30 GMT on Friday. The EUR/USD advanced 0.05% to 1.1385, from an opening of 1.1377.

If you have any questions, comments or opinions regarding the US Dollar, feel free to post them using the commentary form below.

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