* U.S. wages rise less than expected in February
* Dollar index hits lowest level in nearly a week
* Dollar pares gains vs yen after touching 7-week high
(Updates to U.S. market open, adds jobs report data, quote,
changes dateline, previous LONDON)
By Dion Rabouin
NEW YORK, March 10 The dollar fell on Friday
after a report showed U.S. wages rose less than expected in
February and tempered expectations for a spate of interest rate
The Labor Department's non-farm payrolls report showed
employers added 235,000 jobs last month, beating expectations
However, average hourly earnings missed expectations, rising
by only 0.2 percent last month, leading markets to price in a
slower pace of rate hikes, analysts said.
“It’s a very solid report; however, the dollar has failed to
appreciate given how market expectations were sky-high for a
robust report," said Joe Manimbo, senior market analyst at
Western Union Business Solutions in Washington.
"Once again the wage number continues to overshadow," he
added, "and with wages rising in lackluster fashion, that has
tempered expectations for the Fed to raise rates at a faster
pace this year."
The data also fell short of Wednesday's ADP report, which
showed private-sector employers added 298,000 jobs in February.
Fed fund futures prices showed investors now see a 93
percent chance of an increase in U.S. overnight interest rates
this month, according to CME Group's FedWatch tool. But that
number was close to 90 percent before the data was released.
A rate hike this month is a done deal, but "the notion of
more than three rate hikes seems a bit premature," Manimbo said.
The Federal Reserve indicated it planned to raise interest
rates three times this year when it increased them in December
for the first time in a year.
The euro rose to $1.0646, its highest against the
dollar since Feb. 17. That was motivated by reduced expectations
for Fed tightening this year and the strong language of European
Central Bank President Mario Draghi, who on Wednesday increased
the euro zone's growth and inflation targets for 2018.
The dollar index, which tracks the greenback against
six major world currencies, fell to 101.470, its lowest level in
nearly a week.
The dollar also fell to its lowest in nearly a week against
the Swiss franc, dipping to 1.0083 francs.
The greenback did manage to hang onto its gains against the
yen. After touching a seven-week high of 115.50 yen in
European trading, the dollar was last up 0.25 percent at 115.19
(Reporting by Dion Rabouin)