Dollar Set for Second Week of Gains Following U.S. Jobs Data

Impact of U.S. Jobs Data on Currency Markets

By Chibuike Oguh

Dollar Performance Against Major Currencies

NEW YORK, Jan 9 (Reuters) - The dollar gained on Friday after data showed slower than expected U.S. jobs growth, suggesting the Federal Reserve could leave interest rates unchanged later this month.

Global Economic Reactions

Financial markets had been bracing for a possible Supreme Court decision that could strike down President Donald Trump's sweeping tariffs. But the court will now not issue that ruling on Friday, though a decision could still come next week.

Japanese Yen Weakness

The U.S. economy added 50,000 jobs in December, according to Labor Department data released on Friday. That was lower than an estimated increase of 60,000 jobs forecast by economists in a Reuters poll.

European Currency Trends

The dollar index rose 0.31% to 99.18 and was set for the second consecutive week of gains.

"In real life, the standard error margin for non-farm payrolls is 20,000 and so I don't think the market is going to pay much attention to this," said Steve Englander, head of global G10 FX Research at Standard Chartered.

Fed funds futures are pricing an implied probability of 95% that the central bank holds interest rates at its next two-day meet on January 27 and 28, up from 68% a month ago, the CME Group's FedWatch tool shows. 

YEN WEAKENS

The Japanese yen weakened following a report that Prime Minister Sanae Takaichi is considering calling a snap election for parliament's lower house in the first half of February.

Data showed Japanese household spending unexpectedly grew in November from a year earlier, indicating that consumption accelerated before the Bank of Japan lifted its policy rate to a 30-year high in December. 

The dollar hit a one-year high of 158.185 against the yen. It was last up 0.78% to 158.11 yen, on track for the second straight week of gains.

In Europe, German exports unexpectedly fell in November as shipments to other EU countries and the U.S. dropped, while industrial output rose despite expectations of a decline.

The euro was down 0.26% at $1.1628, on track for the second straight week of losses against the dollar.

Meanwhile in China, annual consumer price inflation accelerated in December to its highest in almost three years. 

The dollar weakened 0.10% to 6.975 versus the offshore Chinese yuan.

In other currencies, the pound sterling was down 0.24% to $1.3403, while the Canadian dollar weakened 0.24% versus the greenback to C$1.39 per dollar.

The dollar was up 0.34% to 0.802 against the Swiss franc, headed for the second straight week of gains.

And the Australian dollar  weakened 0.33% versus the greenback to $0.6675. Bitcoin gained 0.10% to $91,297.45. 

(Reporting by Chibuike Oguh in New York; Editing by Chizu Nomiyama, Nick Zieminski and Joe Bavier)