The US dollar on Friday rose after data showed that US employers added significantly more jobs last month than economists expected, potentially giving the US Federal Reserve more leeway to keep hiking interest rates.
The US dollar closed up 1.22 percent at 102.99 on the day against a basket of currencies.
The euro fell to US$1.0805 from US$1.0908.
Photo: Reuters
The dollar rose to ￥131.07 from ￥128.65.
The New Taiwan dollar yesterday fell 0.6 percent against the US dollar, dropping NT$0.180 to close at NT$29.900. Turnover totaled US$177 million during the trading session. The NT dollar gained 0.79 percent from Monday’s NT$30.137.
EARNINGS BOOST
Average hourly earnings rose 0.3 percent after gaining 0.4 percent in December.
That lowered the year-on-year increase in wages to 4.4 percent from 4.8 percent in December.
The US Department of Labor’s closely watched employment report showed that nonfarm payrolls surged by 517,000 jobs last month.
Data for December were revised higher to show 260,000 jobs added instead of the previously reported 223,000.
Economists polled by Reuters had forecast a gain of 185,000 jobs and a 4.3 percent year-on-year jump in wages.
REVERSAL
The surprisingly strong payrolls number reversed a move from Wednesday, when traders raised bets that the US central bank would stop hiking borrowing costs after a widely expected 25-basis-point increase in March.
“After the Fed meeting it looked like markets had the advantage — it was still pricing in a rate cut, they took interest rates down, and they took the dollar down, and now I think 48 hours later the Fed looks like they might have the upper hand again,” said Marc Chandler, chief market strategist at Bannockburn Global Forex in New York.
The US central bank on Wednesday raised rates by 25 basis points and said it had turned a key corner in the fight against high inflation, leading investors to price in a more dovish path going forward.
Fed officials in December said they expected to raise the central bank’s benchmark overnight interest rate above 5 percent, and they have stressed they would need to hold it in restrictive territory for a period of time to sustainably bring down inflation.
CHANGING BETS
Traders have bet that the rate would peak below 5 percent and that the Fed will cut rates in the second half of the year as the economy slows.
Traders are now pricing in the Fed’s policy rate to peak at 4.98 percent in June, up from 4.88 percent on Thursday afternoon.
Additional reporting by staff writer, with AP and CNA
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