- Dollar Index declines sharply, reaching 96.71.
- US nonfarm payrolls rise by 126,000 in March versus expectations for 245,000.
- Nonfarm payrolls report likely supports the Federal Reserve’s cautious approach to interest rate normalization.
The US dollar index declined sharply on Friday, as nonfarm payrolls rose at the slowest rate since December 2013 in a sign that a weaker domestic economy was weighing on job creation.
The dollar index, a trade-weighted average of the dollar against a basket of six currencies, plunged 0.8 percent to 96.71.
The EURUSD broke through a key resistance and was targeting the 1.10 level. The pair climbed 100 pips to 1.0980 after backtracking on Thursday.
Meanwhile, the USDJPY declined 0.65 percent to 118.99, its lowest level since February.
In economic data, March nonfarm payrolls rose at half the rate of forecast, as weak corporate earnings and a slowdown in consumer spending weighed on hiring activity. Nonfarm payrolls increased by only 126,000 in March, following a downwardly revised gain of 201,000 in February that was originally reported as 295,000, the Labor Department reported on Friday. A median estimate of economists called for a gain of 245,000.
The March rate was the first time in 14 months employers added fewer than 200,000 payrolls. It was also the weakest pace of hiring since December 2013.
The unemployment rate held steady at 5.5 percent, a more than six-and-a-half year low.
Friday’s report offers the Federal Reserve plenty of scope in keeping interest rates near zero for a while longer. The federal funds rate has been left unchanged since December 2008. While the Fed is expected to begin normalizing monetary policy this year, any adjustment will be slow and gradual. Observers note that policymakers likely won’t begin hiking interest rates until September at the earliest.