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US job openings smashed expectations last month

The dollar gave up gains in lunchtime trading, despite official figures showing the number of new jobs added in the US economy smashed expectations in February.

The closely-watched non-farm payroll figure rose to 313,000 in February, compared with economists' expectations of 200,000, which would have been flat on the previous month.

Unemployment remained in line with February at 4.1 per cent, the figures showed, although analysts had expected it to fall to four per cent.

However, there was one black cloud: growth in average hourly earnings fell back to 2.6 per cent, from 2.8 per cent in January. Economists had expected it to remain flat.

The news pushed the dollar to €0.8126, down from €0.8140 in earlier trading. It fell as low as £0.7226 against the pound.

"Economic growth has risen and inflation expectations have ticked higher but we are just now getting back to the Fed’s target of two per cent core inflation," said Kully Samra, UK managing director at Charles Schwab.

"Many wondered, including the Fed, whether the link between a tighter labour market and wage growth/inflation was permanently broken, but it appears the secular forces restraining wages and inflation may be dissipating.

"Leading economic indicators, coupled with fiscal policy, suggest a higher and longer trajectory for economic growth. Higher inflation and tighter financial conditions point to an era of higher market volatility, however we don't expect these factors will have a long-term impact on either stocks or the economy."

Read more: Last Week in the City: Trump signs order for tariffs

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