US Dollar Rises amid Positive Signs on the US Economy Creating More Jobs than Previously Expected

The dollar rose sharply against the Japanese yen on positive signs on the US economy as job creation in March and April increased more than expected.

It rose more than 1 per cent against the yen and initially wiped out earlier losses against the euro and the pound after non-farm payroll figures for April were higher than expected, with 165,000 jobs created last month.

Job creation for the previous month was revised upwards significantly, leading to optimism on the strength of the US economy.

The dollar rose 1.3 per cent against the yen to Y99.27 after the figures were released.

“The data is very solidly US dollar positive, but probably not enough to prompt an immediate assault on the Y100 level for the dollar-yen,” said Alan Ruskin, currency strategist at Deutsche Bank.

The euro fell against the dollar following the jobs figures but later clawed back its losses after separate data showed that the US services sector grew at a slower pace in April, maintaining expectations that the Federal Reserve would continue to ease monetary policy to stimulate the economy. The single currency was later 0.4 per cent higher at $1.3159.

The dollar had made gains earlier in the week after the US Federal Reserve said it would continue buying bonds to stimulate growth for as long as necessary after the economy grew by less than expected in the first quarter of the year. The US dollar also rose after the European Central Bank cut headline interest rates in the eurozone on Thursday.

The euro declined 1 per cent against the dollar after Mario Draghi, ECB president, hinted at the possibility of a further rate cut and negative deposit rates in the future.

“Negative deposit rates would be euro-negative across the board adding to the upside pressure on European currencies like the Swedish krona, the Norwegian krone, the UK pound and the Swiss franc,” said foreign exchange analysts at Citigroup.

The single currency rose more than 1.5 per cent against the yen on Friday to Y130.34 and was 0.2 per cent stronger against the pound at £0.8422.

The UK pound rose after figures showed that the UK services sector grew at its fastest rate in eight months in April. Despite losing ground after the US jobs report, sterling was later 0.3 per cent higher on the day to touch $1.56 against the dollar, remaining close to its highest level in three months.

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About GREGinSD

A Generation X|Y'er that resides in beautiful San Diego, Ca.
This entry was posted in Economics, News and politics, Trends and tagged , , , , , , , , , . Bookmark the permalink.

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