Sun, May 08, 2005 - Page 10 News List

Dollar gets strong impetus from good news on US jobs

AFP , NEW YORK

The US dollar got a boost on Friday from strong US jobs data, which eased concerns of a US economic slowdown and supported the notion of more rate hikes by the Federal Reserve.

The euro fell to US$1.2829 at 9pm GMT from US$1.2956 late on Thursday in New York. The US dollar stood at ¥105.07, from ¥104.46 on Thursday.

Official data revealed that US nonfarm payrolls had risen by 274,000 in April, well above analysts' forecasts.

"Dollar buyers had been hesitant to act ahead of the jobs report, but the outcome should provide strong impetus to the dollar over coming days," said Mitul Kotecha, currency analyst at CALYON.

The data should help ease concerns about a "soft patch" developing in the US economy and encourage the Federal Reserve to raise interest rates at each meeting through to November, bringing the benchmark federal funds rate to 4.0 percent by year-end, he said.

"If the data maintain this path over coming months and labor costs rise as productivity slows, the risk remains that the Fed may have to accelerate the pace of tightening," he added.

Michael Woolfolk at Bank of New York noted that the currency market was also encouraged by upward revisions to US job creation in February and March.

Taken together with the strong April number, the argument is that the "soft patch" in the US economy may not have existed at all, he said.

The pound stayed soft as the British Labour party returned to power with a sharply reduced majority in general elections.

In late New York trade, the dollar stood at 1.2067 Swiss francs from SF1.1929. The pound traded at US$1.8903 after US$1.9036 late on Thursday.

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