US dollar climbs on solid US jobs report; trade tensions lurk

Reuters, NEW YORK

Sun, Sep 09, 2018 - Page 14

The US dollar rose against a basket of other currencies on Friday, as US job growth surged last month, but investor concerns about a possible escalation of the US-Chinese trade conflict held gains in check.

Non-farm payrolls surged by 201,000 jobs last month, the US Department of Labor said on Friday.

Average hourly earnings increased 0.4 percent last month, resulting in an annual increase 2.9 percent, the largest since June 2009.

Strengthening wage growth underscores tight labor market conditions and cements the likelihood of a third interest rate increase from the US Federal Reserve this year when policymakers meet on Sept. 25-26.

“This is a solid report. It reinforced the view that the Fed will raise rates at the next meeting,” Moody’s Analytics chief economist Mark Zandi said in West Chester, Pennsylvania.

US benchmark Treasury yields rose to their highest in almost a month and the US dollar index, which measures the greenback against a basket of six other currencies, rose 0.33 percent to 95.33, up 0.2 percent for the week.

In Taipei, the New Taiwan dollar rose against the US dollar, gaining NT$0.026 to close at NT$30.776, down 0.14 percent from last week’s NT$30.731.

“Today we are seeing the knee-jerk reaction as far as the dollar to just move on rate differentials and the bond market move,” said Steven Englander, global head of G10 FX research at Standard Chartered Bank in New York.

The public comment period for proposed US tariffs on an additional US$200 billion worth of Chinese imports ended on Thursday and investors await the firing of a fresh salvo in the ongoing US-Chinese trade war.

“In some ways, it might have been easier for the market if it [US tariffs] had just been announced last night,” said Greg Anderson, global head of foreign exchange strategy at BMO Capital Markets in New York.

“It’s there as little bit of a bogey for the market,” he said.

The Australian dollar skidded to near a two-and-a-half-year low following weak home loan data and as trade-related tensions continued to pressure commodity-linked currencies.

The New Zealand dollar slipped to trade just above a recent two-and-a-half-year year low of US$0.6530.

Sterling jumped to a one-week high against the US dollar on news the EU’s chief Brexit negotiator, Michel Barnier, told British lawmakers earlier this month that he wanted to discuss with the UK how to solve the Irish border issue, but that both sides were under great time pressure.

However, the sterling later fell to end the week with a 0.3 loss against the US dollar.

Additional reporting by CNA, with staff writer