* U.S. nonfarm payrolls rise 209,000 in July
* Data shows low U.S. wage inflation
* ISM U.S. factory activity rises to 57.1 in July
(Updates prices, adds comments)
By Sam Forgione
NEW YORK, Aug 1 The U.S. dollar was on track for
its biggest daily loss against a basket of major currencies in
over three weeks on Friday after the U.S. government's July
employment report showed no signs of wage inflation, supporting
a continued dovish stance from the Federal Reserve.
The Labor Department said U.S. nonfarm payrolls increased
209,000 last month, below economists' expectations for an
increase of 233,000, while the unemployment rate unexpectedly
rose to 6.2 percent. Data for May and June were revised to show
a total of 15,000 more jobs created than previously reported.
Analysts said the increase in the labor force participation
rate, to 62.9 percent from 62.8 percent, and roughly flat
average hourly earnings growth were critical because they
indicated a lack of wage inflation, which the Fed is closely
monitoring as a potential signal of reduced slack in the
economy. Increasing wage inflation could prompt the central bank
to raise rates.
"Low wage growth may buy the Fed a bit more time," said Jens
Nordvig, head of G10 FX strategy at Nomura Securities
International. "It is the one good excuse they have left for not
normalizing" monetary policy, he said.
He added, however, that the dollar's "underlying
strengthening trend" was "hardly in question."
The U.S. dollar index was last down 0.16 percent at
81.327, retreating further from Thursday's 10-1/2-month high of
The index, however, posted its third straight weekly gain,
largely on the view that recovering U.S. economic growth would
pave the way for a more hawkish Fed.
The dollar had little reaction to The Institute for Supply
Management reporting its index of national factory activity rose
to 57.1 in July, holding its losses. The ISM reading was the
highest since April 2011.
Consumer sentiment for July, meanwhile, was slightly below
expectations. Thomson Reuters/University of Michigan's final
July reading on the overall index on consumer sentiment came in
at 81.8, a touch below the 82.0 estimate.
"None of these numbers matter because Janet Yellen appears
to not look at anything other than wage inflation, and she is
looking at the wage inflation numbers that say everything is
fine," said Axel Merk, president and chief investment officer of
Palo Alto, California-based Merk Investments.
The euro was last up 0.28 percent against the dollar
at $1.3426 after hitting a session high of $1.3444.
Against the yen, the dollar was last down 0.21
percent at 102.57 yen after hitting a low of 102.35 yen, and was
down 0.31 percent against the Swiss franc at 0.9057 franc
after hitting a session low of 0.9042 franc.
The yield on benchmark 10-year U.S. Treasury notes
dipped to 2.51 percent, from 2.56 percent late
(Reporting by Sam Forgione; Editing by Dan Grebler)