FOREX-Dollar jumps as wage growth spurs hawkish Fed bets

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      Graphic: World FX rates https://tmsnrt.rs/2RBWI5E



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    By Karen Brettell
       NEW YORK, Dec 2 (Reuters) - The dollar jumped on Friday
after data showed that U.S. employers added more jobs than
expected in November while average hourly earnings also
increased, potentially giving the Federal Reserve more incentive
to raise interest rates.
    Employers added 263,000 jobs in November, well above
estimates of 200,000. Average hourly earnings jumped by 0.6% in
the month, above expectations for a 0.3% gain.
    Marc Chandler, chief market strategist at Bannockburn Global
Forex in New York, said that markets reacted to the hourly
earnings data and the participation rate, which declined to
62.1%.
    "Both of those measures reflect more than the nonfarm
payroll growth number the tightness of the labor market," he
said.
    The dollar index was last up 0.38% on the day against
a basket of currencies at 105.04, though the greenback slipped
0.04% on the day against the Japanese yen to 135.26.
The euro dropped 0.44% on the day to $1.0479.
    "Stronger-than-expected hiring can buy the Fed more time to
stay aggressive," Joe Manimbo, senior market analyst at Convera
in Washington, said. "The dollar is catching twin tailwinds as
yields rise and risk aversion returns as the jobs report casts
doubt on a soft landing."
    The greenback had tumbled on hopes that the Fed was closer
to the end of its tightening cycle after Fed Chairman Jerome
Powell said on Wednesday that it was time to slow rate hikes,
noting that "slowing down at this point is a good way to balance
the risks."
    Data on Thursday also showed that inflation is moderating,
with the the personal consumption expenditures (PCE) price index
rising 0.3% after advancing by the same margin in September. In
the 12 months through October, the PCE price index increased
6.0% after advancing 6.3% in September.
    "Markets are really buying into the pivot story from the
Fed," ING FX strategist Francesco Pesole said.
    But Friday's data could pause the bearish trend, especially
as the move against the greenback looks stretched in the
near-term.
    "The short-term momentum indicators were oversold for the
dollar," Chandler said.
    The next major U.S. economic indicator will be consumer
price inflation data due on Dec. 13, one day before the Fed
concludes its two-day meeting on Dec. 14.
    The U.S. central bank is expected to increase rates by an
additional 50 basis points at the meeting. Fed funds futures
traders are now pricing for the Fed's benchmark rate to peak at
4.96% in May.
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    Currency bid prices at 9:22AM (1422 GMT)
 Description      RIC         Last           U.S. Close  Pct Change     YTD Pct       High Bid    Low Bid
                                              Previous                   Change
                                              Session
 Dollar index                 105.0400       104.6600    +0.38%         9.802%        +105.5900   +104.3600
 Euro/Dollar                  $1.0479        $1.0526     -0.44%         -7.82%        +$1.0545    +$1.0430
 Dollar/Yen                   135.2550       135.3300    -0.04%         +17.51%       +135.9750   +133.6200
 Euro/Yen                     141.76         142.42      -0.46%         +8.78%        +142.4700   +140.7800
 Dollar/Swiss                 0.9407         0.9370      +0.42%         +3.15%        +0.9439     +0.9326
 Sterling/Dollar              $1.2206        $1.2264     -0.48%         -9.75%        +$1.2297    +$1.2137
 Dollar/Canadian              1.3463         1.3433      +0.21%         +6.47%        +1.3520     +1.3422
 Aussie/Dollar                $0.6771        $0.6812     -0.57%         -6.82%        +$0.6836    +$0.6743
 Euro/Swiss                   0.9856         0.9857      -0.01%         -4.95%        +0.9869     +0.9824
 Euro/Sterling                0.8584         0.8589      -0.06%         +2.19%        +0.8608     +0.8572
 NZ                           $0.6354        $0.6372     -0.27%         -7.15%        +$0.6412    +$0.6330
 Dollar/Dollar
 Dollar/Norway                9.8110         9.7265      +0.16%         +10.59%       +9.8630     +9.7420
 Euro/Norway                  10.2873        10.2368     +0.49%         +2.74%        +10.2948    +10.2293
 Dollar/Sweden                10.4074        10.2912     +0.64%         +15.41%       +10.4659    +10.2891
 Euro/Sweden                  10.9086        10.8390     +0.64%         +6.53%        +10.9202    +10.8382
 (Additional reporting by Samuel Indyk in London and Gertrude
Chavez-Dreyfuss in New York; Editing by Susan Fenton and Andrew
Heavens)