Dollar slips as U.S. jobs report erodes outlook for higher rates

(Bloomberg) — The dollar fell after a U.S. labor report showing the lowest jobs gains in more than a year had investors pushing back the time table for the Federal Reserve raising interest rates.

The U.S. currency slid against most of its major peers as the release showed companies added 126,000 jobs in March, the fewest since December 2013. Traders had speculated that the Fed could raise rates as soon as June.

“This kind of number is a perfect excuse to sell the dollar,” said David Donabedian, chief investment officer in Atlanta at Atlantic Trust Private Wealth Management, which oversees $26.2 billion. “You’re getting some people reappraising the path of Fed rate increases and pushing it back. But I think as the year evolves we’re going to see that the U.S. economy does fine — not spectacular, but solid.”

The Bloomberg Dollar Spot Index, which tracks the U.S. currency against 10 major peers, tumbled 0.8 percent to 1,181.25 as of 9:54 a.m. in New York. The dollar declined 1.1 percent to $1.0996 per euro, and dropped 0.7 percent to 118.90 yen.

The payrolls increase was lower than the most pessimistic forecast in a Bloomberg survey and followed a 264,000 gain a month earlier that was smaller than initially reported, the Labor Department said. The median forecast in a Bloomberg survey called for a 245,000 increase. The unemployment rate held steady at 5.5 percent.

‘Weak number’

“This number is not a good sign — there’s no way around this one,” Alvise Marino, an emerging-markets currency strategist at Credit Suisse Group AG in New York, said in a phone interview. “However, you need to see a lot of more these negative signs before the whole story changes.”

The U.S. central bank is scrutinizing incoming data as it looks to increase borrowing costs for the first time in almost nine years. The Fed removed a commitment to being “patient” on rates at its March meeting, even as it slashed projections for the target rate this year.