LONDON(AFX) - The euro stumbled against the dollar following stronger-than-expected headline U.S. labour market data, dealers said.
Total nonfarm payroll employment rose by 135,000 on the month in February, exceeding expectations by a good 30,00-40,000 while the unemployment rate was at 4.2 pct, unchanged from January and firmer than consensus figures of 4.3 pct. "The headline figures were firmer than expected and the market is reacting by buying dollars, especially when a weak number had already been priced in," Adam Chester, economist at Halifax said.
There is a divergence in the pattern of U.S. employment, with the manufacturing sector in sharp decline but the service sector showing good resilience, he added.
Of concern was the uptick in the hourly earnings figure which rose by 0.5 pct in February, compared with forecasts of 0.4 pct, he said. "This signals worrying wage pressures," he added.
While the data may not prove sufficient to stop the Federal Open Market Committee from cutting rates at its March 20 meeting, they may perhaps be persuaded to opt for a smaller 25 basis point cut instead of the much talked about 50 basis points, he said.
At 1:49 pm, the euro was at 0.9314 usd, compared with 0.9340 before the data was released.