He dollar index recovered after an erratic start to the week and reached its highest in almost two months, after it was learned that employers created many more jobs in January than expected, which reduces the chances that the United States Federal Reserve (Fed) cutout Interest rates short term.
The index, which measures the price of dollar against a basket of six major currencies, it was trading at 104.04 units, the highest level since December 12, rebounding compared to what was expected at the beginning of the day.
He euro fell to $1.07810, staying above the $1.07800 hit on Thursday, which was the weakest since Dec. 13, while the greenback rose to 148.58 yen, below the 148.80 hit on January 19.
Furthermore, depending on the tool FedWatch According to CME Group, the probability of a Fed rate cut in March is 21%, up from 38% on Thursday, and in May it is 75%, up from 94% previously.
Employment data exceeded expectations
In USA, Nonfarm payrolls rose by 353,000 jobs last month, beating economists’ expectations for an increase of 180,000 jobs. Average hourly earnings rose 0.6% after rising 0.4% in December.
“It exceeded expectations,” he said. Marc Chandler chief market strategist at Bannockburn Global Forex in New York, while noting: “The market has further reduced the chances of a cut in March and reduced the number of cuts (it expects) the Fed to make this year.”
Fed concerns dissipated
He dollar weakened in recent days in line with falling Treasury yields, even after Fed Chairman Jerome Powell said on Wednesday that a rate cut in March was unlikely.
The Treasury bond have benefited from safe-haven demand due to renewed concerns about the financial health of US regional banks.
But those worries were allayed on Friday, as shares of U.S. regional banks recovered slightly from a brutal sell-off the previous two days, helping yields rise.
The movement of bonds and dollar It also largely reflects repositioning, following a strong January for the greenback and rising Treasury yields during the month.
“After a lot of movement in most of January, I would say there was some adjustment of positions,” he said Chandler, adding that after Friday’s jobs data, “I expect a firmer dollar trend.”
Source: Ambito
