The US dollar strengthened on Friday after data showed an increase in jobs in the world’s largest economy last month, suggesting that the US Federal Reserve might have to raise interest rates next month.
Prior to the jobs report, the rate futures market had been betting that the Fed would pause at next month’s policy meeting. The market has now priced in a 70 percent chance the Fed would raise interest rates by 25 basis points, although multiple rate cuts have also been factored in by the end of the year.
Friday’s data showed US nonfarm payrolls increased by 236,000 last month, in line with forecasts of 239,000.
Photo: Reuters
Data for February was revised higher to show 326,000 jobs were added instead of 311,000 as previously reported.
The unemployment rate fell to 3.5 percent from 3.6 percent in February, while average hourly earnings, which reflect wage inflation, rose 0.3 percent last month after gaining 0.2 percent in February.
“Federal Reserve officials are likely to continue delivering their higher-for-longer message in the run-up to the May policy meeting, supporting expectations for a final rate hike and putting a floor under the dollar,” said Karl Schamotta, chief market strategist at Corpay in Toronto.
“That said, recent data would suggest that the economic risk backdrop is turning more negative; if inflation and retail sales numbers disappoint in coming weeks, all bets are off,” he added.
Liquidity thinned in the hours following the release of the jobs number ahead of the Easter weekend.
The US dollar index rose 0.27 percent to 102.10, but shrank 0.4 percent from a week earlier.
The New Taiwan dollar rose against the US dollar, gaining NT$0.082 to close at NT$30.446, an increase of 0.03 percent from NT$30.454 a week earlier.
Against the yen, the dollar closed up 0.29 percent at ￥132.17 yen, while the euro was 0.13 percent weaker at US$1.0908.
Sterling also fell against the US dollar, down 0.15 percent at US$1.2419.
Analysts said that while the jobs report showed strong gains, there are sectors that have seen moderate declines, specifically the manufacturing and construction industries.
“[This] should be an encouraging sign to the Fed some effects of monetary policy are starting to take hold,” said Charlie Ripley, senior investment strategist at Allianz Investment Management in Minneapolis.
Additional reporting by CNA with staff writer
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