The US dollar plunged the most since December last year against the euro after US jobs growth trailed forecasts, weakening the case for the US Federal Reserve to raise interest rates as early as this month.
The US dollar’s tumble was the biggest post-payrolls move in at least a year, according to Bloomberg data.
The US dollar dropped 1.7 percent to US$1.1342 per euro as of 1:56pm New York time, the biggest decline since Dec. 3 last year.
It lost 2.1 percent to ￥106.62.
The Bloomberg Dollar Spot Index, which tracks the currency against 10 major peers, fell 1.4 percent.
The US currency rose 3.7 percent last month, paring losses this year, after policymakers including Fed Chair Janet Yellen said higher rates in the coming months look appropriate.
The employment report throws cold water on prospects for greenback strength based on policy divergence between a tightening Fed, while central banks in Europe and Asia add to stimulus.
“The dollar correction higher is over for now,” said Georgette Boele, a currency strategist at ABN Amro Bank NV in Amsterdam. “A wave of weakness is likely. The weak report is heavily weighing on the dollar.”
New Zealand’s dollar, South Africa’s rand and the Sweden’s krona each gained more than 2 percent versus the greenback.
“For the next two weeks into the June meeting, there’s a possibility the currency market will price out the hikes to just one this year,” said Minh Trang, a senior foreign-exchange trader at Silicon Valley Bank in Santa Clara, California.
Fed officials next meet on June 14 and 15.
Nonfarm payrolls climbed 38,000 last month, the smallest number of workers in almost six years, and less than the most pessimistic forecast in a Bloomberg survey.
The jobless rate dropped to 4.7 percent, the lowest since November 2007, as Americans left the labor force.
Hedge funds and money managers turned net bullish on the dollar versus eight major peers for the first time in six weeks in period ended May 24, according to the Commodity Futures Trading Commission.
Bets that the currency will rise outnumbered bearish positions by 67,430 contracts, compared with net bearish positions of 10,653 the previous week.
Strategists still forecast a stronger US dollar for the year.
The US currency is projected to strengthen to US$1.10 per euro and ￥115 by the end of the year, according to Bloomberg surveys of analysts.
The US dollar fell against the New Taiwan dollar yesterday, shedding NT$0.099 to close at NT$32.506, from NT$32.528 on Friday last week.
While the US dollar fell to its lowest level since May 9, when the currency closed at NT$32.417 against the NT dollar, turnover in the local exchange market was low, as many foreign traders were away for the weekend, the dealers said.
The local foreign exchange market was the only market in the world open yesterday, a make-up day due to the Dragon Boat Festival this week.
The greenback opened at NT$32.35 and moved between NT$32.255 and NT$32.508 before the close. Turnover totaled US$363 million during the trading session.
Indonesia’s rupiah strengthened 0.4 percent on Friday after Indonesian Minister of Finance Bambang Brodjonegoro on Thursday said a decision by S&P Global Ratings this week to maintain the nation’s junk status was “not appropriate.”
Its advance trimmed this week’s loss to less than 0.1 percent.
Fitch Ratings and Moody’s Investors Service awarded the nation investment grade status more than four years ago.
“The Indonesian rupiah is still one of the better stories within the Asian space,” said Sim Moh Siong, a foreign-exchange strategist at Bank of Singapore Ltd. “The fundamental story for Indonesia has been improving even though it did not enjoy the upgrade by S&P.”
The won gained 0.3 percent and Thailand’s baht advanced 0.1 percent.
The MSCI Emerging Markets Currency Index climbed 0.1 percent.
The British pound weakened 2.7 percent this week to ￡0.7811 per euro as of 5:31pm London time on Friday. That is the biggest drop since just before the British general election in May last year.
Sterling slid 0.7 percent to US$1.4519, its steepest weekly decline since May 6.
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