The dollar fell on Friday in choppy trading after the US employment report showed a smaller-than-expected rise in wages last month despite strong jobs gains, likely prompting the Federal Reserve to be less aggressive in raising interest rates this year. The greenback has struggled amid concerns about the Trump administration's preference for a weak dollar. It posted its worst January in percentage terms in 30 years.
This week, the trend continued to be lower, with the greenback down 2.3 percent against the yen in its worst weekly performance since late July.
The dollar index has ended lower for six consecutive weeks.
Further compounding the dollar's anaemic trend this year was Friday's report showing that January non-farm payrolls rose by 227,000 jobs, the largest gain in four months. But the unemployment rate rose one-tenth of a percentage point to 4.8 percent and wages increased modestly, suggesting there was still some slack in the labour market that would keep inflation in check.
As a result, Fed fund futures priced in a less than 10 percent chance of a rate hike in March on Friday after the jobs data, according to the CME Group's FedWatch. Rate futures have instead priced in a June hike, with a probability of more than 60 percent.
"It was largely the consideration of low wage growth that put a significant damper on the outlook for near-future Fed rate hikes," said James Chen, head of research at Forex.com in Bedminster, New Jersey, adding that average hourly earnings reflect labour and consumer inflation.
Average hourly earnings rose just 0.1 percent, lower than the market's forecasts for a 0.3 percent increase. There was also a downward revision to the December wage growth.
The jobs report's dovish implications were reinforced late on Friday by Chicago Fed President Charles Evans, who said he favours gradual rate hikes.
In late trading, the dollar index, which tracks the greenback versus six top currencies, was flat to slightly lower at 99.776.
Against the yen, the dollar was down 0.1 percent at 112.70 yen. The euro, meanwhile, was up 0.2 percent against the dollar at $1.0775.
January's US non-manufacturing index also showed a reading of 56.5, slightly lower than the market's 57.0 forecast. . But the number remained higher than the 54.9 average for the whole of 2016, according to High Frequency Economics.
"A little lower then expected, but still fairly strong," said Jim O'Sullivan, High Frequency's chief US economist. "The data suggests good upward momentum."