Sun, Jun 03, 2018 - Page 14 News List

US dollar inches up on stronger-than-expected jobs data

Reuters, NEW YORK

The US dollar on Friday inched up following the release of expectation-beating US employment data, which stoked inflation fears and prompted traders to raise bets the US Federal Reserve will hike interest rates a fourth time this year.

US job growth last month accelerated and the unemployment rate dropped to an 18-year low of 3.8 percent, pointing to rapidly tightening labor market conditions.

The US Department of Labor’s report also showed solid wage gains, making a rate hike this month near-certain, and increasing expectations of a fourth hike this year.

Bets by traders in short-term interest-rate futures showed confidence in hikes this month and in September, and see about a 36 percent chance of a rate hike in December, up from about 32 percent before the report.

The Fed has raised rates once this year so far, in March.

In Taipei, the New Taiwan dollar on Friday rose against the greenback, gaining NT$0.116 to close at NT$29.864 in the wake of foreign fund inflows throughout the session. The NT dollar rose 0.3 percent against the US dollar from last week’s NT$29.945.

Against a basket of six currencies, the US dollar rose 0.5 percent to a session high of 94.45.

However, the move was relatively muted compared with the blockbuster jobs numbers.

That is because “the market was fairly pricing the Fed’s path coming into the number, which was a shift from the beginning of the week where the market took out some of the rate hikes,” said Charles Tomes, senior investment analysts at Manulife Asset Management LLC.

Political turmoil in Italy earlier this week drove the US dollar index to a six-and-a-half-month high, but expectations of a fourth rate hike this year decreased over fears of a eurozone crisis.

The euro edged higher on Friday and broke a six-week losing streak, supported by a drop in Italian bond yields after a revived coalition deal between two anti-establishment parties pulled the country back from snap elections.

With receding worries that political turmoil in Italy would roil markets, investors have — after strong inflation data this week — shifted their focus back to predicting when the European Central Bank will raise interest rates.

Annual inflation in the 19 countries using the euro last month rose to 1.9 percent from 1.2 percent in April, well above expectations for a 1.6 percent increase.

On Friday, the single currency edged 0.2 percent higher to a session high of US$1.1717. On a weekly basis, rose 0.5 percent.

The British pound on Friday rose 0.4 percent to US$1.3346, up 0.3 percent from last week’s US$1.3307.

The Japanese yen on Friday dropped 0.6 percent to ¥109.47 per US dollar, little changed from last week’s ¥109.42.

Additional reporting by Bloomberg and CNA

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