US Dollar Strengthens After Strong Jobs Data
Washington (Feb 6) The US dollar spiked up against its major counterparts on Friday, as the economy created much better than expected jobs in January, indicating sustained recovery in the labour market.
According to a data released by Labor Department , non-farm payroll employment rose by 257,000 jobs in January compared to economist estimates for an increase about 230,000 jobs.
Employment in November and December were revised up to 423,000 jobs and 329,000 jobs, respectively, reflecting a net upward revision of 147,000.
Nonetheless, the report also showed that the unemployment rate edged up to 5.7% in January from a six-year low of 5.6% in December. The rate had been expected to remain unchanged.
The solid data underscored the Fed's optimistic view on the US economy and reinforced expectations that the central bank will start tightening policy by the middle of the year.
The Federal Reserve should "look through" the "temporary" trend of low inflation and raise interest rates sooner than later, according to Charles Plosser , the president of the Philadelphia Fed.
Fears about a stronger dollar and low inflation should not overshadow above-trend growth in the overall US economy, Plosser told CNBC Friday morning.
The greenback strengthened to 0.9277 against the franc and 1.5257 against the pound, off early weekly low of 0.9172 and a 5-week low of 1.5351, respectively. Extension of the greenback's uptrend may take it to resistance levels of around 0.95 against the franc and 1.51 against the pound.
The greenback spiked up to a weekly high of 118.43 against the yen, after having fallen to 117.12 at 8:25 am ET . Next key resistance for the greenback may be located around the 120.00 zone.
Preliminary figures from the Cabinet Office showed that the leading index for Japan , which measures the future economic activity, increased less than expected in December, after falling in the previous month.
The leading index climbed to 105.2 in December from 103.7 in November. Economists had expect the index to rise to 105.4.
The greenback, which recovered from previous 3-day low of 1.2376 against the loonie and an 8-day low of 0.7875 against the aussie, reversed direction and was trading higher at 1.2499 and 0.7779, respectively. If the greenback extends rise, it may find resistance around 1.26 against the loonie and 0.75 against the aussie.
The greenback hit a 2-day high of 0.7332 against the NZ dollar, up from an early 2-day low of 0.7444. Extension of the greenback's bullish trend may see it locating resistance around the 0.70 mark.
The US currency climbed to 1.1351 against the euro, reversing from its prior low of 1.1485. The greenback is poised to test resistance around the 1.10 area.
Data released by Destatis showed that Germany's industrial production growth remained stable in December, defying expectations for a faster rate of increase.
Industrial output grew 0.1% in December from a month ago. Production was forecast to rise 0.4% after expanding by a revised 0.1% in November.
Looking ahead, US consumer credit data for December is due shortly.
Source: AllianceNews
