Dollar gains most in three weeks after strong jobs report
NEW YORK (Reuters) – The dollar posted its biggest daily gain in three weeks on Friday after a U.S. government report showed employment rose more than expected in July, pushing bond yields higher and strengthening arguments in favor of a faster tightening of US monetary policy.
The dollar index against major currencies was up 0.6% 92.80 by 12:40 p.m. ET (4:40 p.m. GMT).
Against the safe havens of the Japanese yen and Swiss franc, the dollar posted its largest daily gains since June, reflecting a risky trend as well as the attractiveness of higher US interest rates.
The report on the non-farm payroll in the United States showed that the number of jobs increased by 943,000 in July from the 870,000 predicted by economists polled by Reuters.
The news rekindled the dollar’s momentum, which was founded mid-week by statements by Federal Reserve Vice Chairman Richard Clarida suggesting the conditions for an interest rate hike could be in place as soon as the end of the month. 2022.
Fed officials have said improving employment is key as they begin to withdraw further from the additional support they provided to the economy during the pandemic.
Clarida’s remarks lifted Treasury yields after five weeks of decline, while “real” yields, excluding inflation, are expected to record a series of six-week declines.
On Friday, the yield on the 10-year Treasury bill hit 1.30%, from 1.18% on Monday.
The greenback appreciated 1% against the Swiss franc and 0.45% against the Japanese yen, which was trading at 110.27 per dollar.
The euro fell 0.6% to $ 1.1757, down 0.6%. It was put under pressure earlier today by weaker than expected German industrial order data.
The British pound fell 0.4% to $ 1.387.
Unlike the U.S. payroll report, in Canada, a domestic employment report showed significantly fewer jobs added in July than expected. The greenback appreciated 0.5% to 1.2561 Canadian dollars.
Analysts have warned that markets will be looking for more evidence than a jobs report indicating that US yields will rise significantly again. Friday’s yield was still almost half a percentage point lower than at the end of March.
Reactions to monthly jobs reports changed most often this year in the days after the data was released, Wells Fargo Securities strategists found when examining subsequent movements in the 10-year Treasury yield. .
Big changes in exchange rates are unlikely until Federal Reserve officials make it clear that they are ready to lead other central banks to withdraw economic support, said Joseph Trevisani, senior analyst at fxstreet.com.
“The Fed is pumping a lot more money into the US economy and, by diffusion, into the rest of the world than anyone,” Trevisani said.
Markets will then watch for comments from Fed policymakers at the end of the month at a central bankers’ symposium in Jackson Hole, Wyoming.
When Fed policymakers are confident in US job gains to raise interest rates, the global economy could be strong enough to support riskier currencies instead of the dollar.
A recent Reuters poll of strategists showed that most predicted a decline in the dollar over the next year.
“We are in the phase of the economic cycle where growth and global trade will remain relatively strong, and this will provide a bearish bias for the dollar,” said Vasilieos Gkionakis, global head of foreign exchange strategy for the Lombard Odier group.
Auction price in currency at 12:40 p.m. (4:40 p.m. GMT)
Description RIC Last closure US Pct Change YTD Pct High Bid Low Bid
92.8030 92.2670 + 0.59% 3.136% +92.8440 +92.2660
$ 1.1757 $ 1.1833 -0.64% -3.77% + 1.1834 $ + 1.1755
Dollar / Yen
110.2700 109.7850 + 0.45% + 6.73% +110.3500 +109.7100
Euro / yen
129.64 129.89 -0.19% + 2.14% +129.9600 +129.5900
Dollar / Switzerland
0.9154 0.9065 + 0.98% + 3.47% +0.9155 +0.9065
Pound sterling / dollar
$ 1.3870 $ 1.3927 -0.40% +1.53% +1.3932 $ +1.3862
1.2561 1.2501 + 0.47% -1.37% +1.2581 +1.2495
Australia / Dollar
$ 0.7355 $ 0.7403 -0.64% -4.39% + $ 0.7406 + $ 0.7347
Euro / Switzerland
1.0762 1.0728 + 0.32% -0.42% +1.0763 +1.0721
Euro / Pound
0.8475 0.8495 -0.24% -5.17% +0.8501 +0.8471
Dollar / Dollar $ 0.7010 $ 0.7060 -0.67% -2.35% + $ 0.7062 + $ 0.7003
Dollar / Norway
8.8835 8.8200 + 0.65% + 3.38% +8.8900 +8.8210
Euro / Norway
10.4470 10.4307 + 0.16% -0.19% +10.4585 +10.4053
Dollar / Sweden
8.6663 8.6103 + 0.01% + 5.73% + 8.6724 + 8.6061
Euro / Sweden
10.1892 10.1886 + 0.01% +1.12% +10.2013 +10.1605
Reporting by David Henry in New York, Sujata Rao and Ritvik Carvalho in London, and Tom Westbrook in Singapore; Editing by Andrew Heavens and David Holmes