NEW YORK (Reuters) - The dollar rose against the euro and yen in choppy trading on Friday after data showed the U.S. economy created more jobs than expected last month, but gains were capped by wages data that analysts said were disappointing.
That could weigh on the pace of interest rate rises next year as the Federal Reserve grapples with sluggish wages that reflect persistently low inflation.
The dollar came off three-week highs after the report, while the euro, although still down on the day, recouped some of those losses.
U.S. non-farm payrolls rose by 228,000 jobs in November amid broad gains in hiring as distortions from recent hurricanes faded. Economists polled by Reuters had forecast payrolls rising by 200,000 jobs last month.
But analysts said average hourly earnings were lower than expected. Average hourly earnings rose five cents or 0.2 percent in November, but economists expected a 0.3 percent rise. The annual increase in wages was also weaker than forecast: the November figure came in at 2.5 percent versus a 2.7 percent expectation.
"The wages data reinforces the belief that inflationary pressures remain well-contained, keeping the Federal Reserve's monetary tightening plans in check," said Karl Schamotta, director of global product & market strategy at Cambridge Global Payments in Toronto.
"Wages typically rise at a faster clip during this stage in an economic expansion, making the absence of earnings growth worrisome for policymakers on the central bank's rate-setting committee," he added.
Following the data, the dollar pared gains against the yen but was still higher on the day at 113.35 yen, up 0.2 percent. The euro reduced losses versus the dollar, but still traded weaker at $1.1757, down just 0.1 percent.
(Reporting by Gertrude Chavez-DreyfussEditing by Chizu Nomiyama)
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