The US dollar soared after a surge in US hiring bolstered the case for the US Federal Reserve to raise interest rates next month.
The currency advanced to its strongest since April versus the euro and its highest in more than two months versus the yen after a US Department of Labor report showed the US added the most workers in almost a year last month, beating all forecasts.
Bloomberg’s gauge of the greenback advanced to its highest in data going back to December 2004 as traders boosted bets that the Fed will raise rates next month.
The gains came after Fed Chair Janet Yellen this week said that a rate increase next month is a “live possibility” if economic data hold up. That contrasts with global policymakers confronting slow growth and lackluster inflation.
European Central Bank (ECB) President Mario Draghi reiterated this week that the ECB will consider further stimulus at next month’s meeting, and Bank of England Governor Mark Carney on Thursday cited a weakened global outlook in keeping UK rates at record-low levels.
“Very impressive,” New York-based Mizuho Financial Group Inc head of US corporate foreign-exchange sales Fabian Eliasson said of the US jobs report. “This obviously supports a sooner-rather-than-later rate hike, and that would obviously be very supportive of the dollar.”
The greenback strengthened 1.3 percent to US$1.0741 per euro as of 5pm in New York, the highest since April 22. It added 1.1 percent to ¥123.13.
The Bloomberg Dollar Spot Index rose 1.1 percent to 1,232.53, after touching 1,234.26. The dollar gained against all 10 of its Group-of-10 peers, and it added more than 1.9 percent versus the Turkish lira and the South African rand.
There is a 68 percent probability that the central bank will raise its benchmark rate at its December meeting, according to futures data compiled by Bloomberg, up from 56 percent before the report’s release. The calculation assumes the effective fed funds rate averages 0.375 percent after the first increase.
Labor Department data showed US payrolls increased by 271,000 in October, versus estimates for a gain of 185,000 in a Bloomberg survey of economists. The jobless rate fell to 5 percent, the lowest since April 2008, while average hourly earnings climbed from a year earlier by the most since July 2009.
The US dollar rose against the New Taiwan dollar Friday, gaining NT$0.012 to close at NT$32.73 amid caution as traders waited for the US job data, dealers said.
Turnover totaled US$1.076 billion during the trading session.
The yuan in Hong Kong posted the biggest weekly drop since its August devaluation on signs China’s economic growth remains weak and on prospects the US will increase interest rates as early as next month.
Manufacturing in the world’s second-largest economy contracted for a third month in October, official data showed on Sunday last week. Exports probably fell for a fourth month, while imports extended the longest stretch of declines in six years, according to analysts’ estimates in a Bloomberg survey before data due Nov. 8. The freely traded yuan dropped 0.8 percent this week to 6.3731 a dollar as of 4:36pm in Hong Kong, data compiled by Bloomberg show. That was the most since the period ended Aug. 14.
It was steady on Friday. The rate in Shanghai, which is allowed to diverge a maximum 2 percent from the central bank’s fixing, fell 0.56 percent from Oct. 30 and slipped 0.1 percent on Friday to close at 6.3530, according to China Foreign Exchange Trade System prices.
The rupee retreated 0.8 percent this week to 65.765 a US dollar in Mumbai, prices from local banks compiled by Bloomberg show. That was the steepest drop since the five days ended Aug. 21. The currency ended little changed on Friday after falling as low as 65.8350, the weakest level since Sept. 30.
The British pound fell 2.5 percent this week to US$1.5036, after reaching its lowest level since April 23. It touched a two-and-a-half-month high of £0.7042 per euro on Thursday, before paring its gains and ending the week at £0.7138.
Additional reporting by staff writer, with CNA
ISSUES: Gogoro has been struggling with ballooning losses and was recently embroiled in alleged subsidy fraud, using Chinese-made components instead of locally made parts Gogoro Inc (睿能創意), the nation’s biggest electric scooter maker, yesterday said that its chairman and CEO Horace Luke (陸學森) has resigned amid chronic losses and probes into the company’s alleged involvement in subsidy fraud. The board of directors nominated Reuntex Group (潤泰集團) general counsel Tamon Tseng (曾夢達) as the company’s new chairman, Gogoro said in a statement. Ruentex is Gogoro’s biggest stakeholder. Gogoro Taiwan general manager Henry Chiang (姜家煒) is to serve as acting CEO during the interim period, the statement said. Luke’s departure came as a bombshell yesterday. As a company founder, he has played a key role in pushing for the
China has claimed a breakthrough in developing homegrown chipmaking equipment, an important step in overcoming US sanctions designed to thwart Beijing’s semiconductor goals. State-linked organizations are advised to use a new laser-based immersion lithography machine with a resolution of 65 nanometers or better, the Chinese Ministry of Industry and Information Technology (MIIT) said in an announcement this month. Although the note does not specify the supplier, the spec marks a significant step up from the previous most advanced indigenous equipment — developed by Shanghai Micro Electronics Equipment Group Co (SMEE, 上海微電子) — which stood at about 90 nanometers. MIIT’s claimed advances last
CROSS-STRAIT TENSIONS: The US company could switch orders from TSMC to alternative suppliers, but that would lower chip quality, CEO Jensen Huang said Nvidia Corp CEO Jensen Huang (黃仁勳), whose products have become the hottest commodity in the technology world, on Wednesday said that the scramble for a limited amount of supply has frustrated some customers and raised tensions. “The demand on it is so great, and everyone wants to be first and everyone wants to be most,” he told the audience at a Goldman Sachs Group Inc technology conference in San Francisco. “We probably have more emotional customers today. Deservedly so. It’s tense. We’re trying to do the best we can.” Huang’s company is experiencing strong demand for its latest generation of chips, called
GLOBAL ECONOMY: Policymakers have a choice of a small 25 basis-point cut or a bold cut of 50 basis points, which would help the labor market, but might reignite inflation The US Federal Reserve is gearing up to announce its first interest rate cut in more than four years on Wednesday, with policymakers expected to debate how big a move to make less than two months before the US presidential election. Senior officials at the US central bank including Fed Chairman Jerome Powell have in recent weeks indicated that a rate cut is coming this month, as inflation eases toward the bank’s long-term target of two percent, and the labor market continues to cool. The Fed, which has a dual mandate from the US Congress to act independently to ensure