Dollar bulls are taking little comfort in the budding recovery in the US employment market.
The US currency fell against most of its major peers after the US Department of Labor said payrolls rebounded last month following an even bigger setback a month earlier than previously estimated. That has pushed out trader expectations for when the US Federal Reserve will begin raising interest rates, which up until the middle of last month had underpinned a nine-month rally in the greenback.
“It really hasn’t been the barn burner that the dollar bulls were hoping for,” Bipan Rai, director of foreign-exchange strategy at Canadian Imperial Bank of Commerce’s CIBC World Markets unit, said by telephone from Toronto. “There is scope for the dollar to remain on the defensive.”
The Bloomberg Dollar Spot Index, which tracks the US currency against 10 major peers, fell 0.1 percent to 1,164.21 as of 4pm in New York. It has gained 16 percent in the past year.
The euro fell 0.6 percent to US$1.1199, leaving it unchanged this week. The dollar was little changed at ￥119.76.
Investors sold the 19-nation currency, using the euro to fund purchases of riskier assets, such as European stocks and bonds, on speculation the Fed will wait longer before boosting borrowing costs.
“It’s all risk appetite,” John Hardy, head of foreign- exchange strategy at Saxo Bank A/S in Hellerup, Denmark, said by e-mail. “Risk goes up, the euro goes down.”
The 223,000 increase in US employment followed an 85,000 gain in March that was the smallest since June 2012, figures from the Labor Department showed.
The jobless rate fell to the lowest since May 2008 as more Americans entered the labor force and found work. Average hourly earnings climbed less than forecast.
“We’re seeing some good job gains, it’s not bad, but the market has increased focus on wages and inflation down the road,” New York-based Standard Chartered PLC senior strategist Mike Moran said. “It’s a bit of a reality check in terms of whether wage inflation is finally going to emerge. We could see a little more consolidation in the dollar in the short run.”
The US central bank is weighing economic data to determine the timing of its first interest-rate hike since 2006.
Bond yields “could see a sharp jump” when liftoff occurs, Fed chair Janet Yellen said on Sunday last week.
The pound rose with UK stocks as Conservative British Prime Minister David Cameron swept to victory in the nation’s general election.
Sterling surged the most in three-and-a-half years against the euro and strengthened versus all but one of its 16 major peers as the surprise result ended concern that drawn-out talks would be needed to form a government.
The pound strengthened 1.6 percent to 72.74 pence per euro at 4:35pm London time, the biggest gain since October 2011, based on closing-market data. It rose 1.3 percent to US$1.5443 and reached US$1.5523, the highest level since Feb. 26.
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