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Job and trade data boost US dollar

A foreign currency exchange worker checks the authenticity of US dollar bills at a bank in Bangkok, Thailand, on Friday. The Thai baht jumped to another nine-year high of 35.13 to the US dollar on Friday, following massive sales of dollars by exporters. The New Taiwan dollar edged down NT$0.055 to close at NT$32.968 against the greenback on Friday. PHOTO: EPA

The US dollar traded mainly higher on Friday as strong US job and trade data reduced the likelihood of the US Federal Reserve cutting interest rates any time soon.

The euro eased to US$1.3112 at 10pm GMT, from US$1.3131 late in New York on Thursday.

The dollar climbed to ?118.29, from ?117.14 late on Thursday.

Data released on Friday showed the US economy added 97,000 jobs in February.

Though the headline figure was more or less in line with expectations, upward revisions to past data and an unexpected drop in the unemployment rate caused the market to see the figures in a positive light.

"This was a strong report through and through -- upward revisions, strong earnings growth, temporary weather effects and an unemployment rate near the cycle low," said Jeoff Hall at Thomson IFR Markets.

"The results should silence calls for an immediate change in the Fed's policy bias, let alone calls for an ease at the March, May or perhaps even the June meeting," he said.

Also boosting the dollar meanwhile were further figures showing a drop in the US trade deficit in January.

The strong jobs figures also helped to boost the outlook for global growth, allowing risk appetite to build and the so-called "carry trade" to resume.

Carry trades occur when money is borrowed in countries with low interest rates, such as Japan, to be invested in higher-yielding assets elsewhere and are seen as risky transactions.

Typically they benefit high-yielding currencies such as the Australian and New Zealand dollars to the detriment of low-yielders such as the yen and the Swiss franc.

Michael Woolfolk at Bank of New York said fears about the yen and the Japanese economy appear to have subsided.

"The second consecutive day of gains in the NIKKEI has calmed concerns over further unwinding of the yen carry trade," he said.

"While we are not entirely out of the woods just yet with at least one more week of Japanese `window dressing' to go ahead of fiscal year-end, we have succeeded in trading back to levels seen a week ago," Woolfolk said.

The New Taiwan dollar dropped NT$0.055 to close at NT$32.968 against is US counterpart on the Taipei Forex Inc.

In late New York trade, the US dollar stood at 1.2347 Swiss francs from SF1.2275 on Thursday.

The pound was being traded at US$1.9318 from US$1.9282 late on Thursday.
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