NewsMarch 12, 2018 by Kate Leaman

Dollar Steady on Mixed NFP Report

The U.S. dollar was steady and stronger in the dollar index on Friday. This was after the non-farm payroll report showed that job growth in the United States had its best month in over a year in a half in the month of February. However wage gains slowed more than expected. This supports the Federal Reserve Board will not accelerate is rate hike path in 2018.

The Japanese yen was weaker, across the board, After the Bank of Japan kept its dovish monetary policy settings in place.

The central bank’s Governor Haruhiko Kuroda, was optimistic on growth. However, he stressed there is no need to change monetary policy before the two percent inflation target is reached and sustained.

Non-Farm Grew by 313,000 in February

According to Reuters News, the U.S. Labor Department reported that the non-farm payrolls grew by 313,000 in February. This was the largest monthly increase since July 2016. However, average hourly earnings rose only 0.1 percent. This was way below the 0.3 percent increase in the month of January. I was also below the expected 0.2 percent growth.

Traders thought that a tightening labor market would support the case for the Fed to raise key interest rates later this month. They also expect two more rate hikes later this year. The slow down with wage growth will likely mean that the Federal Reserve will only raise rates three or four times in 2018.

Speaking to Reuter News, Chuck Tomes, senior trader at Manulife said that

while this is good news for the U.S. economy, this doesn’t change anything with the Fed. The path of three rate hikes stays as our base case.

The newly released NFP report could bolster the dollar in the near term but there is a lot of tension around global trade. Especially with President Donald Trump’s steel and aluminum tariffs. Trump signed those into law on Thursday. Also faster growth economic growth outside the United States remains a longer term drag on the almighty buck.

Bloomberg TV Markets and Finance

The Euro Trades down after the ECB Announcement

The EUR/USD Forex market was also down later in the week. The euro last fetched $1.2304, down 0.05 percent as of Friday’s close. The euro was weaker after the European Central Bank’s President Mario Draghi, acknowledged faster growth in the European Union but said that inflation remained weak. He also said that protectionism, Trump’s tariffs, were a risk to the Continent’s economic growth.

USD/JPY Was Higher and BOJ in the News

The Bank of Japan is also in the headlines as we enter the week. The USD/JPY Forex market was higher and at a weekly high after the Japanese central bank kept to the script. They left its negative rate policy in place, as was expected. BOJ chief Kuroda, like Draghi, was very cautious about the risk of protectionism and lower inflation growth.

The Japanese yen also fell as currency traders scaled back their safe haven assets. News that President Donald Trump was going to meet with North Korea’s leader Kim Jong Un, was considered a potential major breakthrough in regards to regional nuclear tensions.