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US dollar tanks on payrolls report

The US dollar on Friday fell broadly after posting gains the past three weeks as a solid, but not spectacular, US non-farm payrolls report stirred doubts about the path of rate increases next year.

However, analysts said the US dollar’s weakness was just a short-term correction, a much- needed one, after a strong rally in the wake of Donald Trump’s victory in the US presidential election on Nov. 8.

The US dollar index posted its first weekly fall in four weeks against a currency basket, but was still up 1.7 percent for the year.

Non-farm payrolls increased 178,000 jobs last month, but data for September and October were revised to show that fewer jobs were created than previously reported. Wage growth for the month was just 2.5 percent, compared with expectations of 2.8 percent, unchanged from October.

“I think the market was a little less excited about wage growth this past release, but in general, my view on the [US] dollar has not changed. This is just some profit-taking, some squaring up of positions,” said Ron Waliczek, managing director of OTC FX and interest rates at INTL FCStone Inc in Chicago.

“I do think that the [US] dollar has another leg up, about 6-7 percent toward the 107, 108 level in the [US] dollar index,” he said.

In late trading on Friday, the US dollar index fell 0.3 percent to 100.77. It was down 0.7 percent for the week.

The US dollar fared slightly better against the yen. The US currency was flat at 113.990 after rising to a near 10-month high of 114.830 the previous day and was up 0.6 percent for the week.

In Taipei, the New Taiwan dollar on Friday fell against the greenback, dropping NT$0.031 to close at NT$31.923, as traders reacted to heavy selling of shares by foreign institutional investors, dealers said. The NT dollar is up 0.06 percent from last week’s NT$31.942 per US dollar.

The euro rose 0.7 percent on Friday night after Reuters reported the European Central Bank will extend its bond purchases beyond March and consider sending a formal signal next week that the asset purchase program will eventually end.

It last stood little changed at US$1.0659, up 0.8 percent for the week.

Sterling gained on a perceived crack in Britain’s “hard Brexit” line following comments from British Secretary of State for Exiting the EU David Davis.

On Friday, the pound was up a fraction at US$1.2596 after rising 0.7 percent the previous day when it touched a two-month high of US$1.2696.

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