Wheat prices give up more than one percent as dollar shines

Wheat futures fell more than one percent as dollar rose according to their inverse relation, following a stream of earlier data from the U.S., the world's largest wheat producer and exporter, which showed the unemployment rate at an eight-year low, while new jobs slowed down and wages grew sharply in January. 

As of 09:17 GMT, Wheat futures due on March 16 slid 1.27% to $466.75 a bushel, down from the opening level of $473.75, with an intraday low at $465.50, and a high at $474.00. 

On a related note, the dollar index, which measures the U.S. currency against a host of major rivals, traded last at 97.05, up from the opening of 96.57, with a session-high at 97.27, and a low at 96.32. The index slumped to a four-month low yesterday at 96.25. 

Earlier data showed the Non-Farm Payrolls report with a surprising deceleration of jobs growth to 151 thousand in January, compared to December's 292K and expectations of 190K. Inversely however, the unemployment rate fell unexpectedly to 4.9%, the lowest since February 2008, and compared to expectations and last month's 5.0%. Average Hourly Earnings jumped 0.5% m/m in January, compared to December's flat result and forecasts of a 0.3% rise. Separately, The U.S. trade balance for December showed a deficit of $43.4 billion, higher than expectations of $42.9B, and November's deficit of $42.4B.  

Members of the Federal Open Monetary Committee have stuck with their plan of four rate hikes this year to a target of 1.50%, despite a slowdown in the GDP growth in the fourth quarter to just 0.7% from 2.0% in the third, and other pieces of disappointing data. The policymakers didn't talk about the turmoil in the financial markets at their meeting on January 26-27 however, and they didn't change their monetary policy future plans, while keeping overnight lending rates unchanged at 0.50%.  

Their persistence on their path dashed markets' hopes of a halt to tightening plans, but lately, bets on a rate hike in March all but vanished. The meeting in march will set the monetary policy of the Fed clearer and lay out the officials' outlook for unemployment and inflation, in addition to growth in the next three years. Earlier strong employment data raised expectations of a rate hike this year which buoyed the dollar from its weakest level since November, 3, touched on Thursday. The Fed raised interest rates by 25 basis points last December in the first time since 2006.