Finance
Dollar jumps as U.S. job gains, wage growth beat expectations
Global Banking & Finance Review®
Company
By Karen Brettell
NEW YORK (Reuters) – The dollar jumped on Friday after data showed that U.S. employers added more jobs than expected in April, while wages also grew more than economists’ anticipated.
Employers added 253,000 jobs, above economists’ forecasts for a gain of 180,000. U.S. average hourly earnings rose at an annual rate of 4.4%, above expectations for a 4.2% increase.
But data for March was also revised lower to show 165,000 jobs added instead of 236,000 as previously reported.
“I think the headline number is probably not as strong as it looks given the backward revisions,” said Vassili Serebriakov, an FX strategist at UBS in New York.
Friday’s jump in the dollar after the data is also likely in part due to investors who were short the greenback, or betting it would fall, covering their positions, he added.
The dollar has fallen from a 20-year high last September as investors adjust for the likelihood that the Federal Reserve is at or near the end of its tightening cycle and may begin cutting interest rates if the economy continues to slow.
While the U.S. economy is slowing, however, there are still pockets of strength, which is making investors hesitant to get too bearish on the currency for now.
“In the near term it’s hard to get a lot of momentum until we have a more clear directional signal from U.S. data,” said Serebriakov. “For us the resolution ultimately is for consistently weaker U.S. data and a weaker dollar ultimately and a more dovish Fed.”
Fed funds futures traders are pricing in around 78 basis points of cuts by year-end. The Fed raised rates by 25 basis points to 5% to 5.25% on Wednesday and dropped from its policy statement language saying that it “anticipates” further rate increases would be needed.
The dollar index hit a session high of 101.77 and the euro fell to $1.0967. The dollar also jumped to 135.13 against the Japanese yen.
Inflation data due next week is the next major U.S. economic focus.
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Currency bid prices at 9:26AM (1326 GMT)
Description RIC Last U.S. Close Pct Change YTD Pct High Bid Low Bid
Previous Change
Session
Dollar index 101.5800 101.3400 +0.24% -1.846% +101.7700 +101.1100
Euro/Dollar $1.0986 $1.1014 -0.25% +2.53% +$1.1048 +$1.0967
Dollar/Yen 134.8500 134.2650 +0.44% +2.85% +135.1150 +133.8800
Euro/Yen 148.14 147.87 +0.18% +5.60% +148.2700 +147.6900
Dollar/Swiss 0.8943 0.8859 +0.95% -3.28% +0.8972 +0.8836
Sterling/Dollar $1.2583 $1.2575 +0.09% +4.07% +$1.2634 +$1.2559
Dollar/Canadian 1.3461 1.3540 -0.58% -0.64% +1.3539 +1.3460
Aussie/Dollar $0.6713 $0.6694 +0.31% -1.50% +$0.6744 +$0.6689
Euro/Swiss 0.9823 0.9756 +0.69% -0.73% +0.9849 +0.9754
Euro/Sterling 0.8729 0.8759 -0.34% -1.30% +0.8767 +0.8730
NZ $0.6271 $0.6279 -0.09% -1.20% +$0.6316 +$0.6265
Dollar/Dollar
Dollar/Norway 10.6040 10.6910 -0.80% +8.07% +10.6870 +10.5800
Euro/Norway 11.6480 11.7663 -1.01% +11.00% +11.7903 +11.6497
Dollar/Sweden 10.2140 10.2431 -0.53% -1.86% +10.2621 +10.1849
Euro/Sweden 11.2210 11.2807 -0.53% +0.64% +11.2945 +11.2213
(Reporting by Karen Brettell; Editing by Toby Chopra and Jonathan Oatis)
The dollar index measures the value of the U.S. dollar against a basket of foreign currencies. It reflects the dollar's strength and is used to gauge its performance in the global market.
The Federal Reserve, often referred to as the Fed, is the central bank of the United States. It regulates the U.S. monetary and financial system, including interest rates and money supply.
Inflation is the rate at which the general level of prices for goods and services rises, eroding purchasing power. It is typically measured by the Consumer Price Index (CPI).
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