The dollar fell to a three-week low against the yen on Friday after data showed that U.S. jobs growth slowed more than expected in April and annual wage gains cooled, boosting bets that the Federal Reserve will cut rates twice this year.
Employers added 175,000 jobs last month, below economists' expectations for a 243,000 increase. Wages increased 3.9% in the 12 months through April, below expectations for a 4.0% gain after rising 4.1% in March.
The unemployment rate rose to 3.9% from 3.8%, still staying below 4% for the 27th straight month.
"The data's soft across the board from the Fed's perspective," said Jason Pride, chief of investment strategy and research at Glenmede in Philadelphia.
Fed funds futures traders raised bets that the Fed would cut rates twice this year, with 49 basis points of easing now priced in, up from 42 basis points before the data.
"The market at this point is so hoping that the Fed can cut rates this year and did not want one of the hot numbers coming in. Today's report certainly offers them a cooler read of the labor landscape," said Quincy Krosby, chief global strategist at LPL Financial in Charlotte.
Still, the report itself is unlikely to sway Fed policy unless the trend continues.
"An unemployment rate of 3.9% is not something disastrous. This indicates an economy that is not declining dramatically, but it definitely indicates a looser labor market," said Pride. "It gives the Fed some hope, but it does not establish the trend for them."
The Fed said at the conclusion of its two-day meeting on Wednesday that sticky inflation meant that it would take longer to cut rates.
Other data on Friday showed that the U.S. services sector contracted in March, while a measure of prices paid by businesses for inputs jumped, a worrisome sign for the outlook on inflation.
The dollar index was last down 0.2% at 105.04 after earlier reaching 104.52, the lowest since April 10. The euro gained 0.4% to $1.0764.
The greenback weakened 0.5% to 152.87 Japanese yen and got as low as 151.86, the weakest since April 10.
The yen surged late on Wednesday and on Monday, both in light trading conditions, in moves that traders and analysts attributed to intervention by Japanese authorities.
Japanese finance minister Shunichi Suzuki said on Friday that authorities may need to smooth any excessive yen moves that hurt households and companies.
The yen is on track for its best weekly percentage gain against the greenback since November 2022, after Japanese authorities also intervened in October 2022 to shore up the currency.
The Japanese currency reached a 34-year low of 160.245 on Monday as it suffers from a wide interest rate differential with the United States.
In cryptocurrencies, bitcoin gained 4.71% to $61,481.66.