US Dollar Spikes Up After Strong Jobs Data

San Francisco (Jun 5)  The US dollar drifted higher against its major rivals in European deals on Friday, as the economy created more jobs than expected by economists, backing case for a Fed rate hike by September.

According to a report released by the  Labor Department  , non-farm payroll employment increased more-than-anticipated in the month of May, with an addition of 280,000 jobs.

This was higher than expectations for an increase of about 225,000 jobs, following an upwardly revised increase of 119,000 jobs.

Meanwhile, the unemployment rate inched up to 5.5% in May from a nearly seven-year low of 5.4% in April.

The Federal Reserve will hold a 2-day monetary policy meeting on  June 16-17  , with economists expecting any new policy changes by the bank. Economists are now betting for a September lift-off, as they expect economy to regain enough momentum following the first quarter slow down.

The greenback was trading mixed in today's Asian trading. While the greenback held steady against the yen and the franc, it rose against the pound. Against the euro, the greenback dropped.

The greenback strengthened to 125.72 against the Japanese yen, a level unseen since  November 2002  . At yesterday's close, the pair was valued at 124.34. Next key resistance for the greenback-yen pair is seen around the 127.00 zone.

Preliminary figures from the  Cabinet Office  showed that the leading index for  Japan  , which measures the future economic activity, increased as expected in April.

The leading index rose to 107.2 in April from 106.0 in the previous month. The latest reading matched economists' expectations. This was the second consecutive rise in the index reading.

The greenback appreciated to a 4-day high of 0.9475 against the Swiss franc and a 3-day high of 1.1074 against the euro, off early lows of 0.9297 and 1.1279, respectively. The next possible resistance levels for the greenback are seen around 0.96 against the franc and 1.10 against the euro. The greenback ended Thursday's trading at 0.9334 against the franc and 1.1236 against the euro.

The greenback climbed to 1.5215 against the pound, its strongest since  June 2  . The pair was worth 1.5357 when it ended yesterday's trading. If the greenback extends rise, 1.51 is seen as its next possible resistance level.

Reversing from early lows of 0.7725 against the aussie and 0.7147 against the kiwi, the greenback climbed to a 3-day high of 0.7609 and near a 5-year high of 0.7035, respectively. At Thursday's close, the greenback was worth 0.7680 against the aussie and 0.7128 against the kiwi. On the upside, 0.75 and 0.69 are seen as the next possible resistance levels for the greenback against the aussie and the kiwi.

Looking ahead, US consumer credit for April is set for release shortly.

Source: AllianceNews