* Fears rise of North Korea missiles after news report
* Wage data lifts chances of December rate hike by Fed
(Recasts with dollar drop on North Korea report)
By Karen Brettell
NEW YORK, Oct 6 (Reuters) - The U.S. dollar tumbled on
Friday on a report that North Korea is preparing to test a
long-range missile, overturning earlier gains after the
government’s jobs report for September showed an unexpected rise
in wages.
RIA news agency cited a Russian lawmaker's making comments
on the missile test, which North Korea believes can reach the
U.S. West Coast.
“The market is getting more nervous about the prospect of
some kind of a conflict,” said Boris Schlossberg, managing
director of FX strategy at BK Asset Management in New York. “If
they do something over the weekend, even if it’s a mild test,
I’m sure we’re going to open up a with little bit of risk
aversion on Monday.”
The dollar earlier rose to a more than two-month high
against the yen and seven-week high against the euro as wage
data from the September labor market report was seen as a sign
of potentially improving inflation.
Average hourly earnings increased 12 cents, or 0.5 percent,
in September after rising 0.2 percent in August. The gains came
as nonfarm payrolls fell by 33,000 jobs last month after
Hurricanes Harvey and Irma left displaced workers temporarily
unemployed and delayed hiring.
“I think most people realized going in that the headline
numbers would be distorted because of the storms, but the
surprise was the average hourly earnings,” said Win Thin, head
of emerging markets currency strategy at Brown Brothers Harriman
in New York. “This is the missing piece in the Fed’s puzzle.”
The greenback jumped as high as 113.43 yen, the
highest level since July 14, before dropping to 112.71. The euro
fell to $1.1670, the lowest level since Aug. 17, before
rising back to $1.1726.
Tepid inflation has been a bugbear for the Federal Reserve,
which has puzzled over why price pressures remain low even as
the job market improves.
The wage improvement boosted already high expectations that
the U.S. central bank will raise rates at its December meeting,
and that further hikes in 2018 are likely.
"The Fed signaled three rate hikes next year for the dot
plots, and the market does not believe that," said Thin. "I
think if we start getting more numbers like that the market is
going to have to believe it more and more."
(Additional reporting by Dion Rabouin in New York; Editing by
Leslie Adler)
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