Dollar lower as Fed moves still uncertain after US jobs data

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The dollar stood lower on Friday as data showing U.S. unemployment in August at its lowest since 2008 did little to clear away currency markets' uncertainties over whether the Federal Reserve will raise rates later this month.

In a report many analysts had tipped as key for Fed policymakers, the government said nonfarm payrolls increased 173,000 last month as the manufacturing sector lost the most jobs since July 2013.

That marked a slowdown from July's upwardly revised gain of 245,000 and was the smallest rise in employment in five months. However, it might have been weighed down by a statistical fluke that has led to sharp upward revisions to August payroll figures.

Average hourly earnings increased 8 cents, the biggest rise since January, and the workweek rose to 34.6 hours.

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The jobless rate declined 0.2 percentage point to 5.1 percent, its lowest level since April 2008 and in the range that most Fed officials think is consistent with a low but steady rate of inflation.

"The headline was a little weak, but every other metric was strong," said Win Thin, global head of emerging markets at Brown Brothers Harriman & Co in New York. "No one thinks the September (rate hike) is a done deal, but this certainly supports that."

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Expectations of a rate hike by the Fed in September have waned as a slowdown in China has brought increased market volatility across asset classes. That has caused the dollar to struggle in recent weeks, especially against the yen.

The dollar index of major currencies traded against the greenback was 0.15 percent lower at 96.25 after repeatedly fluctuated between gains and losses and last was little changed.

The dollar was down about 0.9 percent against the yen at 119.04.

The dollar was 0.2 percent lower against the euro, which pivoted from earlier gains stemming from unwinding of euro-funded carry trades.

Euro-dollar intraday

Source: FactSet

The euro hit a two-week low against the dollar on Thursday after European Central Bank President Mario Draghi said the bank's bond-buying program may run beyond September 2016 and that its size and composition may be adjusted.