Print

Mail

wiki links

US dollar surges across the board on jobs report

The dollar surged across the board Friday as evidence finally emerged that economic recovery in the United States is translating into solid jobs growth.

The single European currency fell to US$1.2133 from US$1.2362 late on Thursday in New York.

The dollar was at ¥104.49 from ¥103.64 on Thursday, when it hovered close to four-year lows.

The US employment report is a closely watched barometer of the country's economic health.

Muted job growth had been a key factor behind the US Federal Reserve's reluctance to raise interest rates despite the gathering pace of overall economic activity, analysts said.

But data released Friday showed that non-farm payrolls increased by a stunning 308,000 in March against expectations of a 120,000 rise.

The news sparked an instant reaction in the markets, with the euro slumping to a low of US$1.2129 from US$1.2230 ahead of the announcement.

Meanwhile, the dollar rose to a high of ¥104.76 yen from ¥104 earlier.

"This is good news for the US economy and good for the US dollar as it shows signs that the economy is delivering jobs," said ECU Group chief economist Neil Mackinnon.

Though the US emerged from recession over a year ago, there had been little improvement to date in the labour market, which had underpinned a belief that benchmark US interest rates were unlikely to rise from 48-year lows of 1.00 percent anytime soon.

Friday's figures may alter that view as market participants reassess their outlook for US interest rates.

The yield on 10-year Treasury bills jumped to 4.13 percent from 3.88 percent following the report.

"If it marks the beginning of a new trend in payrolls we believe we are on course for an August rate hike, although June cannot be entirely ruled out depending on the strength of the April and May jobs reports," said John Ryding, economist at Bear Stearns.

Meanwhile, yet more strong British house price data continued to underpin sterling ahead of next week's Bank of England rate-setting meeting.

The latest survey from HBOS PLC's unit Halifax found house prices rose 2.2 percent on the month in March, further raising speculation the BoE will raise its key lending rate again over the coming months, having already done so by a cumulative 0.50 points since last November.

A majority of economists polled by AFP's financial news subsidiary AFX News is now predicting another 0.25 point hike on Thursday next week, which would take the key repo rate up to 4.25 percent

The euro was changing hands at US$1.2133 from US$1.2362 late on Thursday in New York, ¥126.78 (¥128.11), £0.6622 (£0.6655) and 1.5654 Swiss francs (Sf1.5612).

The dollar stood at ¥104.49 (¥103.64) and 1.2902 Swiss francs (Sf1.2630).

The pound was at US$1.8317 (US$1.8568), ¥191.41 (¥192.42) and 2.3642 Swiss francs (Sf2.3451).

On the London Bullion Market, the price of an ounce of gold stood at US$419 against US$427.25 late on Thursday.
This story has been viewed 2635 times.