July 6, 2018 / 2:07 PM / 3 months ago

CORRECTED-FOREX-Dollar falls after U.S. nonfarm payrolls report, tariffs kick in

 (Corrects 4th paragraph to show that the 3.8 pct unemployment
rate was for May)
    * U.S. economy creates 213,000 jobs, but unemployment rises
    * U.S. wage rises less than expected
    * U.S. tariffs on Chinese imports take effect
    * Investors fear a currency war amid trade conflict

    By Gertrude Chavez-Dreyfuss
    NEW YORK, July 6 (Reuters) - The dollar hit three-week lows
on Friday after data showed the U.S. economy created more jobs
than expected in June, but a closely-watched inflation gauge -
wage growth - rose less than forecast and the unemployment rate
increased.
    The greenback had already weakened earlier on Friday as the
United States and China imposed tariffs on each other's imports,
but the currency's fall was muted as investors waited for the
jobs report.
    U.S. nonfarm payrolls advanced by 213,000 jobs last month,
the Labor Department said. Data for April and May was revised to
show 37,000 more jobs created than previously reported. 
    The unemployment rate, however, rose to 4.0 percent from an
18-year low of 3.8 percent in May, while the average hourly
earnings rose five cents, or 0.2 percent in June after
increasing 0.3 percent in May.
    "The dollar is coming off because there is a big focus on
the earnings number and in the short-term it takes some pressure
off rates," said Steven Englander, head of G10 FX and North
American macro strategy, at Standard Chartered in New York.
    "We have seen 10-year rates go down by 2 basis points. The
market looks at this and says this is not a particularly dollar
friendly number in the very short-term, but for the economy it
is a great number," he added.
    In mid-morning trading, the dollar index was down 0.5
percent at 94.008. Against the yen, the dollar slid 0.2
percent to 110.50, while the euro rose 0.6 percent to
$1.1759.
    Fed funds futures priced in a 77 percent chance of a
September rate hike, down from 80 percent before the jobs data.
    With U.S. payrolls out of the way, investors focused on the
trade conflict between the world's biggest economic powers as
U.S. tariffs on $34 billion worth of Chinese goods came into
effect.
    Investors are anxious to know whether the latest tariffs
were a continuation of tit-for-tat measures or an escalation
between the two countries which could cause volatility in global
financial markets.
    "Markets are concerned that despite assurances to the
contrary, China may use its currency to hurt the U.S. as it
cannot implement a like-for-like retaliation," said Tom Milson,
executive Director at GWM Investment Management In London. 
    China's yuan was 0.1 percent weaker at 6.6480 per dollar
 but still some distance from Tuesday's 11-month low
of 6.7204. The yuan had retreated amid trade concerns before
pulling back on assurances by China's central bank.
    
    ========================================================
    Currency bid prices at 9:41AM (1341 GMT)
 Description      RIC         Last           U.S. Close  Pct Change     YTD Pct     High Bid    Low Bid
                                              Previous                   Change                 
                                              Session                                           
 Euro/Dollar      EUR=        $1.1757        $1.1689     +0.58%         -1.99%      +1.1763     +1.1680
 Dollar/Yen       JPY=        110.5200       110.6100    -0.08%         -1.91%      +110.7800   +110.4600
 Euro/Yen         EURJPY=     129.94         129.34      +0.46%         -3.88%      +129.9600   +129.2500
 Dollar/Swiss     CHF=        0.9891         0.9930      -0.39%         +1.52%      +0.9944     +0.9889
 Sterling/Dollar  GBP=        1.3270         1.3225      +0.34%         -1.79%      +1.3275     +1.3204
 Dollar/Canadian  CAD=        1.3106         1.3131      -0.19%         +4.21%      +1.3150     +1.3093
 Australian/Doll  AUD=        0.7423         0.7386      +0.50%         -4.85%      +0.7444     +0.7377
 ar                                                                                             
 Euro/Swiss       EURCHF=     1.1630         1.1612      +0.16%         -0.50%      +1.1639     +1.1607
 Euro/Sterling    EURGBP=     0.8859         0.8840      +0.21%         -0.27%      +0.8867     +0.8836
 NZ               NZD=        0.6826         0.6783      +0.63%         -3.67%      +0.6842     +0.6783
 Dollar/Dollar                                                                                  
 Dollar/Norway    NOK=        8.0280         8.0600      -0.40%         -2.18%      +8.0720     +8.0238
 Euro/Norway      EURNOK=     9.4403         9.4226      +0.19%         -4.15%      +9.4529     +9.4093
 Dollar/Sweden    SEK=        8.7468         8.7649      +0.36%         +6.65%      +8.7922     +8.7367
 Euro/Sweden      EURSEK=     10.2842        10.2470     +0.36%         +4.55%      +10.2955    +10.2418
 
 (Reporting by Gertrude Chavez-Dreyfuss, Editing by Franklin
Paul and Susan Thomas)
  
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