The dollar ticked higher Friday after the December U.S. jobs report showed a slowdown in hiring but the strongest wage growth since 2009.
The ICE Dollar Index, which measures the U.S. currency against six others, was recently up 0.4%. It had been up less than 0.2% before the report.
The Labor Department’s closely watched report showed nonfarm payrolls rose by a seasonally adjusted 156,000 in December from the prior month, while the unemployment rate ticked up to 4.7% last month from 4.6%.
Economists surveyed by The Wall Street Journal had expected 183,000 new jobs and a jobless rate of 4.7%.
Analysts said the 2.9% increase in wages, the best annual gain in more than seven years, supported the dollar.
”What matters most right now is the pickup in the wage numbers,” said Mark McCormick, North American head of FX strategy at TD Securities. “It fits into this narrative that inflation is starting to accelerate. This, added with fiscal stimulus coming, provides more legs for the dollar in the first quarter.”
Wage growth has been sluggish throughout the economic recovery even as other indicators of labor-market health have rebounded strongly. Investors believe steady wage growth helps to drive prices and inflation higher, which supports the case for the Fed to raise interest rates.
Higher rates typically boost the dollar by making the currency more attractive to yield-seeking investors.
The dollar was broadly stronger against emerging-market currencies, which are often pressured by higher U.S. rates.
The dollar rose 0.8% against the Chinese yuan in offshore markets, recovering from its biggest two-day slump on record, while the greenback rose 0.6% against the Singapore dollar.
Write to Chelsey Dulaney at Chelsey.Dulaney@wsj.com