Strong jobs gains send US dollar to more than two-week highs

New York

THE US dollar gained against a basket of currencies to its highest levels in 21/2 weeks on Friday after data showed that US job growth rebounded strongly in June.

Non-farm payrolls increased by 224,000 jobs last month, the most in five months, and well above the 160,000 jobs forecast by economists.

The strong gains came after job growth slowed sharply in May. The economy created 11,000 fewer jobs in April and May than previously reported, the government said on Friday.

"You look at the US number for today and there's quite a bit of sticker shock with that," said Bipan Rai, North America head of forex strategy at CIBC Capital Markets in Toronto. "We think the sticker shock and thin liquidity is enough to drive the dollar a little bit firmer for today." The data came as many traders and investors were away, a day after the July 4 holiday and ahead of the weekend.

The dollar index, which measures the greenback against a basket of six major currencies, was last at 97.311, up 0.56 per cent, after earlier rising to 97.443, the highest level since June 19.

Moderate wage gains in June, however, added to evidence that the economy is slowing while the increase in jobs was not enough to offset weakness in May.

"You did get a massive upside surprise but again that's coming after a month in which you had a massive downside miss," Mr Rai said. "If you take the two numbers together you are still averaging at a clip that's slower than prior years' growth." REUTERS