US dollar advances after US nonfarm payrolls data
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THE US dollar strengthened on Friday (Apr 7) after data showed an increase in jobs in the world’s largest economy last month, suggesting that the Federal Reserve may have to raise interest rates next month.
Prior to the jobs report, the rate futures market had been betting that the Fed would pause at the May policy meeting.
The market has now priced in a 68 per cent chance the Fed will raise interest rates by 25 basis points (bps).
Friday’s data showed there were 236,000 new jobs in March, in line with forecasts of 239,000.
Data for February was revised higher to show 326,000 jobs were added instead of 311,000 as previously reported.
“This lunchtime’s US labour market data was broadly in line with expectations and supportive of the view that the jobs market remains remarkably solid despite continued Fed tightening and financial stability concerns,” said Michael Brown, market analyst, Traderx in London.
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“The Fed will look positively on a further rise in participation to a new cycle high 62.6 per cent, while a renewed drop in unemployment to 3.5 per cent coupled with continued healthy headline jobs growth should cement the case for another 25 bps rate hike at the May meeting.”
In mid-morning trading, the US dollar index rose 0.2 per cent to 102.05. Against the yen, the US dollar was up 0.3 per cent at 132.075 yen while the euro was 0.2 per cent weaker at US$1.0905. REUTERS
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