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* U.S. non-farm payrolls show big upside surprise, but wages soft
* Fed still on track to raise rates 3 times this year-analyst
By Gertrude Chavez-Dreyfuss
NEW YORK, Feb 3 (Reuters) - The dollar edged lower against yen and euro on Friday in choppy trading after the U.S. employment report showed a smaller-than-expected rise in wages last month despite strong jobs gains, raising doubts about the strength of the economy.
The report though was positive overall, analysts said, and should keep the Federal Reserve on track for multiple rate hikes this year.
Data showed that January non-farm payrolls rose by 227,000 jobs, the largest gain in four months. But the unemployment rate rose one-tenth of a percentage point to 4.8 percent and wages increased modestly, suggesting that there was still some slack in the labor market that would keep dollar-negative inflation in check.
“I think the biggest miss here is that wages were considerably soft, although I don’t think this will delay the Fed,” said Omer Esiner, chief market analyst, at Commonwealth Foreign Exchange in Washington.
Average hourly earnings rose just 0.1 percent, lower than the market’s forecasts for a 0.3 percent increase. There was also a downward revision to the December wage growth, suggesting the Fed might not rush to hike rates again.
In morning trading, the dollar index, which tracks the greenback versus six top currencies, was flat at 99.821.
Against the yen, the dollar was down 0.1 percent at 112.74 yen.
The euro, meanwhile, was up slightly against the dollar at $1.0765.
Reporting by Gertrude Chavez-Dreyfuss; Editing by Alden Bentley