Dollar advances to four-month high after upbeat US jobs data

New York

THE dollar vaulted to a four-month peak against a basket of major currencies on Friday, propelled by a strong US non-farm payrolls report that followed a spate of upbeat economic data last week, a scenario expected to keep interest rates steady.

The dollar index posted its largest weekly percentage gain in more than two years. The US currency also hit a two-month high against sterling and the Canadian dollar, a six-week peak versus the Swiss franc, and a four-month high against the euro.

However, the dollar fell against the safe-haven yen amid persistent fears about the coronavirus outbreak in China, although investors were focused a little more on US payrolls data for much of the New York session.

Data showed that US non-farm payrolls increased by 225,000 jobs last month, with employment at construction sites increasing by the most in a year given milder-than-normal temperatures. Economists polled by Reuters had forecast payrolls would rise by 160,000 jobs in January.

"Today's positive prints confirmed that the US job market is firing on all cylinders, the US economy is expanding," said Olivier Konzeoue, FX sales trader at Saxo Markets in London. "The Federal Reserve looks set to stay put for the time being."

In Friday afternoon trading, the dollar index rose 0.2 per cent to 98.687.

The dollar was also up 0.3 per cent against the Swiss franc at 0.9772 franc, gained 0.1 per cent versus the Canadian dollar to C$1.3301 and climbed 0.3 per cent versus sterling, which fell to US$1.2887. The greenback, though, fell 0.2 per cent against the yen to 109.76 yen on what analysts said was more a safe-haven play for the Japanese currency in the wake of the coronavirus outbreak.

Across the Atlantic, the euro fell to its lowest level since October on Friday after German industrial output recorded its biggest decline in a decade in December. The European single currency dropped to as low as US$1.0943, and was last down 0.3 per cent. It has lost 1.3 per cent since last Monday, its worst weekly loss since November.

Meanwhile, The offshore yuan was down 0.4 per cent at 7.005 yuan per dollar. REUTERS