US Dollar Extends Rally As Strong Jobs Data Supports December Rate Hike View

Canbera-Australia (Nov 6)  The US dollar extended its early rally against its key counterparts in early New York deals on Friday, as upbeat jobs data for October backed hopes that the Federal Reserve will raise interest rates in December.

The report released by the Labor Department showed that job growth in the US showed a substantial reacceleration in the month of October.

The report said non-farm payroll employment jumped by 271,000 jobs in October following a downwardly revised increase of 137,000 jobs in September.

Economists had expected an increase of about 185,000 jobs compared to the addition of 142,000 jobs originally reported for the previous month.

The strong job growth helped push the unemployment rate down to 5.0% in October from 5.1% in September, matching economist estimates. With the modest decrease, the unemployment rate fell to its lowest level since hitting a matching rate in April of 2008.

The US treasury yields ticked up, with benchmark 10-year yields higher by 2.30% and 30-year equivalent rose by 3.05%. Yields move inversely to bond prices.

Speaking on CNBC's "Squawk Box," Chicago Federal Reserve President Charles Evans told that strong jobs growth will help the inflation to pick up and it supports his outlook on interest rates.

He said he follows similar view of the Fed Chair Janet Yellen on need to focus on rate path.

The greenback was higher on Thursday, amid bets that the Federal Reserve would hike rates by year-end. It gained 1.13% against the pound, 0.16% against the yen and 0.18% against the franc for the day.

The currency extended its gains during today's trading.

The greenback appreciated to 1.0067 against the Swiss franc, a level not seen since March 16. This is up by 1.18% from Thursday's closing value of 0.9950. The greenback is seen finding resistance around the 1.02 area.

The greenback spiked up to 6-1/2-month highs of 1.0707 against the euro and 1.5029 against the pound, from Thursday's closing values of 1.0884 and 1.5207, respectively. If the greenback continues rise, it may locate resistance around 1.05 against the euro and 1.49 against the pound.

The greenback strengthened to a 2-1/2-month high of 123.08 against the yen, from 121.74 hit late New York Thursday. On the upside, the greenback is likely to challenge resistance near the 124.00 region.

Preliminary figures from the Cabinet Office showed that the leading index for Japan, which measures the future economic activity, decreased more-than-expected in September to the weakest level in thirty two months.

The leading index fell to 101.4 in September from 103.5 in the previous month. Economists had expected the index to fall to 101.8.

The greenback firmed to more than a 5-week high of 1.3295 against the loonie, more than 4-week highs of 0.6505 against the kiwi and 0.7049 against the aussie, up from Thursday's closing values of 1.3169, 0.6610 and 0.7142, respectively. The greenback is likely to find resistance around 1.34 against the loonie, against the kiwi and 0.69 against the aussie.

The US consumer credit for September is due in the late New York session.

Source: RTTnews