US dollar rallies towards biggest weekly gain since June
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THE US dollar rose sharply on Friday, boosted by a strong US jobs report, towards its biggest weekly gain in seven weeks. The report showed jobs grew more than expected in July, pushing bond yields higher on the view that the Federal Reserve may act more quickly to tighten US monetary policy.
Against the safe havens of the Japanese yen and Swiss franc, the dollar had its biggest daily gains since June, reflecting a risk-on tone as well as the appeal of higher US interest rates.
The report on US nonfarm payrolls showed jobs increased by 943,000 in July compared with the 870,000 forecast by economists polled by Reuters.
The news rekindled dollar momentum, grounded in the middle of the week by statements from Fed vice-chair Richard Clarida, suggesting that conditions for hiking interest rates might be met as soon as late 2022.
Fed officials have said that improving employment is critical to when they begin to pull back further on extra support they provided for the economy during the Covid-19 pandemic.
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Mr Clarida's remarks lifted Treasury yields after five weeks of declines, while "real" yields, excluding inflation, are set to snap a six-week streak of declines.
The yield on the 10-year Treasury note touched 1.3 per cent, up from 1.18 per cent on Monday.
The greenback rose 0.9 per cent against the Swiss franc and 0.4 per cent on the Japanese yen, which traded at 110.215 to the dollar.
The euro fell 0.6 per cent to US$1.1759, pressured early in the session by weaker than expected German industrial orders data.
The British pound fell nearly 0.4 per cent to US$1.3878.
In contrast to the US payroll report, in Canada a domestic employment report showed far fewer jobs added in July than expected. The greenback rose 0.4 per cent to C$1.2555.
Analysts have cautioned that it will take more evidence than one jobs report to push US yields significantly higher again.
Friday's yield remained nearly one-half a percentage point lower than at the end of March. REUTERS
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