Dollar Strengthens on US jobs data

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New York - The dollar extended gains against most major currencies after a government report employers boosted payrolls in April by the most in two years and the jobless rate plunged to 6.3 percent.

The greenback rose versus the euro and the yen as nonfarm payrolls increased 288,000, compared with a forecast of 218,000 in a Bloomberg survey of 94 participants. Japan’s currency dropped this week as the Federal Reserve pares monthly bond- buying and considers when to raise interest rates.

“The numbers look genuinely solid in every respect, so the dollar higher across the board seems like a perfectly reasonable reaction,” Adam Cole, head of Group of 10 currency strategy at Royal Bank of Canada, said by phone from London. “The market is bringing froward its expectations for Fed tightening , or at least has more confidence rates will rise in the US, so the dollar is rising as a result.”

The Bloomberg Dollar Spot Index, which monitors the greenback against 10 major counterparts, rose 0.3 percent to 1,011.69 at 8:47 a.m. New York time.

The dollar climbed 0.6 percent to 102.92 yen. It advanced 0.4 percent to $1.3820 per euro after weakening to $1.3889 yesterday, the least since April 11. The common currency rose 0.3 percent to 142.32 yen.

A custom Bloomberg index of the 20 most-traded emerging- market currencies fell 0.2 percent to 92.1611 to snap a four-day streak of gains. It is up 0.3 percent this week.

Deutsche Bank AG’s volatility index, based on three-month options for nine major currency pairs, dropped yesterday to 5.8 percent, the lowest since July 2007.

“CONSIDERABLE TIME”

The gain in employment was the biggest since January 2012 and followed a revised 203,000 increase the prior month that was stronger than initially estimated, Labor Department figures showed today in Washington.

Unemployment dropped from 6.7 percent to the lowest level since September 2008 as fewer people entered the labor force. Wages and hours worked were stagnant.

Prior to today’s jobs report, the dollar had declined 3.1 percent in the past three months, according to Bloomberg Correlation-Weighted Indexes, which track 10 developed-nation currencies. The yen declined 3.4 percent and the euro fell 0.1 percent.

Commerce Department figures yesterday showed consumer spending climbed 0.9 percent, the most since August 2009, after a 0.5 percent gain in February.

The US currency dropped April 30 against most major peers after the Fed said it will keep interest rates at almost zero for a “considerable time” after its bond-purchasing program ends. It cut monthly bond buying to $45 billion, its fourth straight $10 billion cut, and said further reductions in “measured steps” are likely.

Futures prices put the likelihood the Fed will start raising borrowing costs by its June 2015 at 47 percent yesterday, based on trading on the CME Group Inc.’s exchange. The chances of a Fed increase are 68 percent by its July 2015 meeting, the data show.

Bloomberg


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