US Dollar Holds Gains on Robust Payrolls, NZ Dollar Rises after Election
Currency Markets React to US Jobs Data and New Zealand Election
US Dollar Performance and Market Drivers
TOKYO, Nov 9 (Reuters) - The US dollar traded not far from a 1-1/2-year high versus the euro and a seven-month high on the Aussie on Monday, after surging by the most in nearly six months on Friday as robust US jobs data pushed up bets for higher interest rates.
Impact of US Payrolls on Dollar Strength
The US dollar index, which measures the currency against six major rivals including the euro, was steady at 102.20 early on Monday, after leaping around 0.7% on Friday, when data showed jobs growth accelerated in October while the unemployment rate fell.
The euro edged up 0.1% to $1.11485, after slumping 0.7% on Friday and hitting a low of $1.1132, not far from the trough from a week earlier at $1.1105, the weakest since May 2025.
The Aussie added 0.3% to $0.6875, after tumbling more than 1% on Friday to the lowest since March 31 at $0.6855.
The dollar eased 0.2% to 158.185 yen, following Friday's 0.6% jump.
Central Bank Commentary and Rate Hike Expectations
Bank of Japan Governor Kazuo Ueda said on Friday the central bank expects underlying inflation to stay around its 2% target but recognises there are "some upside risks."
Futures imply around 79% odds the US Federal Reserve will raise rates on December 9, compared to 71% a week earlier, according to CME Group's FedWatch tool.
Bets on Fed tightening next month had been receding amid a rout in global tech stocks as investors worried about the outlook for AI investment, profitability and regulations, particularly after Democrats swept US midterm elections earlier this month.
"The Blue Sweep has put the AI trade to the test given risks for heavier AI regulation and a slow down in the CAPEX cycle. At the same time, however, economic realities continue to surprise to the upside — data momentum remains very strong across indicators," Barclays strategists wrote in a report. "This combination is yet to dent the dollar's appeal."
Fed Officials' Comments and Broader Currency Movements
Comments from Fed officials on Friday supported views for a rate hike. New York Fed President John Williams said US economic growth has remained remarkably resilient in the face of successive shocks but inflation is too high and it is essential to bring it back to 2%.
Separately, St. Louis Fed President Alberto Musalem said inflation remains a top concern in conversations he has with businesses in his Midwestern district, while Fed Bank of San Francisco President Mary Daly said the Fed will likely still need to hike rates further even with the "painful" tech stock selloff.
Sterling edged up 0.1% to $1.3360, while the greenback eased 0.1% to C$1.4119. On Friday, the US currency surged 1.1% against Canada's loonie after Canadian data showed surprise job losses.
New Zealand Dollar Recovers after Election
New Zealand's currency bounced from a seven-month trough after too-close-to-call weekend elections weakened the government, although the country will need to wait until late this month to find out who will govern as vote counting continues.
The New Zealand kiwi climbed 0.4% to $0.5557 on Monday, bouncing back after hitting a low of $0.5529 at the end of last week.
Election Results and Political Uncertainty
Preliminary results in New Zealand elections gave Prime Minister Christopher Luxon's National Party, ACT New Zealand and New Zealand First 67 seats in a 131-seat parliament, one more than the 66 required for a majority.
But almost 400,000, or nearly 15% of votes, have yet to be counted, and official results are not due until November 27. Both Luxon and Labour leader Chris Hipkins have said they would wait for final results before entering formal coalition negotiations.
(Reporting by Kevin Buckland; Editing by Chris Reese)