By Gertrude Chavez Dreyfuss
NEW YORK (Reuters) – The U.S. dollar rebounded on Friday after data showed the world’s largest economy created significantly more jobs than expected last month, suggesting the Federal Reserve may be slow to begin its monetary easing cycle this year.
The dollar index, which tracks the greenback against six major currencies led by the euro, rose 0.8% to 104.91, its biggest increase since April 10.
The index is on track to gain 0.2% this week, as a strong jobs report offset a series of weak macro indicators that prompted investors to again consider two quarter-point Fed rate cuts in 2024.
The data showed U.S. nonfarm payrolls rose by 272,000 last month, but the revised figure showed payrolls for March and April combined fell by 15,000 from the previous reading. Economists surveyed by Reuters had expected payrolls to rise by 185,000.
Average hourly earnings rose 0.4% after slowing to 0.2% in April. Wages rose 4.1% in the 12 months to May, revised up from an annual increase of 4.0% the previous month.
However, the unemployment rate rose to 4% from 3.9% in April, breaking through the level that had been maintained for 27 consecutive months.
“The market and the Fed bow down to one number, and that’s the jobs number. Of course, it’s not just the headline number that gets the attention, but also the better-than-expected wage number,” said David Rosenberg, founder and president of Rosenberg Research in Montreal.
“But as the saying goes, ‘that’s the way it is.’ Knowing what the Fed is focused on and how lopsided they are when it comes to stock and bond market activity, we should consider this a bearish report because it will only embolden the hawks on the FOMC.”
The FOMC is not expected to make any policy changes at its policy meeting next week.
Following the employment data, interest rate futures markets are pricing in just one rate cut of 25 basis points this year, at the November or December meeting, according to LSEG’s interest rate probability app.
Following the employment data, the chances of a September rate cut fell to about 50.8% from about 70% late on Thursday.
The dollar rose 0.6% against the yen to 156.64 yen. The U.S. dollar is still down 0.4% for the week and is on track for its worst weekly performance since late April, or around the time Japanese monetary authorities intervened to support the yen.
Like the Fed, the Bank of Japan will decide its interest rate policy next week, and a consensus is emerging in the market that it will soon reduce its monthly bond purchases as a way to tighten credit conditions.
Despite its recent strength, the yen is not far from a 34-year low of more than 160 to the dollar hit in late April, prompting the Japanese government to intervene in currency markets, spending about 9.8 trillion yen ($62.9 billion) to bolster the yen’s strength.
Meanwhile, the euro fell 0.8% against the dollar to $1.0803, as the single European currency fell 0.4% on the week, its biggest weekly drop since the week starting April 8.
The pound’s decline came the following day after the European Central Bank warned of a rate cut the previous day but gave little indication of its outlook for monetary policy given that inflation remains above target. Meanwhile, the pound fell 0.5% against the dollar to $1.2722 after hitting $1.2825 earlier in the day, its highest level since mid-March.
currency
bid
price
At 7 o’clock
June
07:19
PM GMT
Description RIC Final US Percent YTD High Low
AEON Closing Price Fluctuation Rate Bid Bid
Previous e
session
Dollar 104.88 104.11 0.76% 3.46% 104.93 103
Index .99
EUR/USD 1.0803 1.089 -0.8% -2.13% $1.090 $1.
3 080 Rah
1
$/year 156.63 155.95 0.44% 11.05% 157.05 155
en .14
EUR/JPY 1.0803 169.44 -0.15 8.71% 169.97 168
% .95
USD/S 0.8964 0.8893 0.8% 6.52% 0.8972 0.8
Whis 881
Pound 1.2719 1.2791 -0.54 -0.03% $1.282 $1.
/dollar % 5 080
1
USD/CAD 1.3749 1.367 0.59% 3.73% 1.3758 1.3
Anadian 663
Aussie/D 0.6582 0.6667 -1.25 -3.44% $0.668 $0.
Oller % 1 658
1
EUR/CHF 0.9682 0.9683 -0.01 4.26% 0.9708 0.9
ss%678
Euro/cent 0.849 0.8512 -0.26 -2.05% 0.852 0.8
Ring% 49
NZ 0.6107 0.6201 -1.46 -3.31% $0.620 0.6
Dollar/Dollar % 3 106
Ola
USD/N 10.7092 10.5439 1.57% 5.66% 10.716 10.
Oway 1 529
2
EUR/NOK 11.5681 11.4855 0.72% 3.08% 11.575 11.
Road 2 471
Four
USD/S 10.541 10.3911 1.44% 4.71% 10.548 10.
Weden 350
7
EUR/SWE 11.3863 11.3143 0.64% 2.35% 11.398 11.
Den 1 274
8
(Reporting by Gertrude Chavez-Dreyfuss; Additional reporting by Amanda Cooper in London and Kevin Buckland in Tokyo; Editing by Alex Richardson, Andrew Heavens and Matthew Lewis)
