Currencies: Dollar slides after jobs report weakness

The U.S. dollar tracked lower on Friday, following a cooler-than-expected jobs report and some dovish Fed speak. Commodity-linked currencies meanwhile strengthened after OPEC members and Russia agreed to curb oil production.

The ICE U.S. Dollar Index DXY, -0.20%  was down 0.3% at 96.548.

The November jobs report was called “uninspiring” by economists, after only 155,000 new jobs were created versus the 190,000 expected. The unemployment rate was steady at 3.7%.

Later in the session, St. Louis Federal Reserve President James Bullard, who will be a voting member of the Open Market Committee next year, said that the central bank should not raise interest rates next week — a move that has long been anticipated by investors. Bullard joined other Fed speakers in openly worrying about the global economy. Market participants have begun to downgrade their rate hike expectations for next year.

Don’t miss: Why currency experts expect the dollar to struggle in 2019

Commodity currencies like the Canadian dollar USDCAD, -0.5978% Norwegian krone USDNOK, -0.4822%  and Russian ruble USDRUB, -0.7794%  climbed after OPEC members and Russia agreed to curb oil CLF9, +2.27%  production. The greenback last bought C$1.3284, down 0.8%; 8.4779 krone, down 0.5%; and 66.3850 ruble, down 0.7%.

Canada’s currency was also supported by a particularly strong jobs report there, which saw unemployment fall to its lowest level in more than 40 years.

The euro EURUSD, +0.2900% the greenback’s major rival and biggest component of the dollar gauge, was higher, fetching $1.1419, versus $1.1379 late Thursday. A revised reading of third-quarter eurozone gross domestic product put it at an annual rate of 1.6%, just below the previous reading of 1.7%.

“Despite being medium-term euro bearish, we admit that a fair amount of ‘bad news’ is already baked into the euro,” said Stephen Gallo, European head of FX strategy. “The growth numbers put the European Central Bank in an awkward position though, and we are starting to come to the conclusion that next week’s ECB decision will be composed of one of two likely options: 1) announce an end to outright purchases alongside a new support program or 2) extend outright purchases by three months.”

In Germany, Europe’s largest economy, Chancellor Angela Merkel’s Christian Democrats chose her longtime ally Annegret Kramp-Karrenbauer — currently the party’s secretary-general — to succeed her as party leader. The party election was seen as a vote for continuity in the CDU.

The British pound GBPUSD, -0.2973%  was weaker at $1.2749, compared with $1.2782 late Thursday, ahead of a crucial Brexit vote next week. On Tuesday, the British Parliament is due to decide whether the deal Prime Minister Theresa May agreed with the European Union will go through.

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