Dollar Advances As Strong U.S. Jobs Data Revives Aggressive Tightening Hopes

dollar 080219 03jun22 lt

The U.S. dollar firmed against its key counterparts in the European session on Friday, after a report showed that the nation's job growth exceeded economist estimates in May, fueling expectations that the Federal Reserve is likely to continue its tightening cycle in the coming months.

Data from the Labor Department showed that non-farm payroll employment jumped by 390,000 jobs in May after surging by an upwardly revised 436,000 jobs in April.

Economists had expected employment to increase by about 325,000 jobs compared to the addition of 428,000 jobs originally reported for the previous month.

The Labor Department said the unemployment rate remained unchanged at 3.6 percent. The unemployment rate was expected to edge down to 3.5 percent.

Treasury yields jumped following the report, with the benchmark yield on the 10-year note up by 2.97 percent. Yields move inversely to bond prices.

Federal Reserve Vice Chair Lael Brainard told CNBC on Thursday that the central bank is unlikely to pause its current rate hike cycle anytime soon and that it has "got a lot of work to do to get inflation down to our 2% target."

The greenback held steady against its key counterparts in the Asian session, except the euro.

The greenback advanced to 1.0704 against the euro, from a 3-day low of 1.0765 seen at 10:15 pm ET. The pair was worth 1.0745 when it closed deals on Thursday. Further rally in the currency may challenge resistance around the 1.04 level.

Data from Destatis showed that German exports rebounded at a stronger than expected pace in April despite sanctions imposed on Russia dampening trade in Europe.

Exports advanced 4.4 percent on a monthly basis, in contrast to the 3.0 percent decline posted in March, data from Destatis showed on Friday. Shipments were expected to grow only 1.5 percent.

The greenback edged up to 1.2520 against the pound, following a 2-day low of 1.2589 it set at 8:30 pm ET. The pound-greenback pair had ended yesterday's trading session at 1.2575. The currency is likely to find resistance around the 1.22 level.

The greenback jumped to over a 3-week high of 130.65 against the yen from Thursday's close of 129.83. The greenback may face resistance around the 132.00 region, if it gains again.

The latest survey from Jibun Bank showed that Japan services sector in Japan continued to expand in May, and at a faster rate, with a services PMI score of 52.6.

That's up from 50.7 in April, and it moves further above the boom-or-bust line of 50.

The greenback touched a 2-day high of 0.9643 against the franc, up from a 4-day low of 0.9556 it recorded at 3:45 am ET. At yesterday's trading close, the pair was quoted at 0.9573. Immediate resistance for the dollar is likely seen around the 0.99 level.

The greenback climbed to 0.7217 against the aussie and 0.6508 against the kiwi, from its Asian session's 6-week low of 0.7283 and more than a 5-week low of 0.6576, respectively. The greenback was worth 0.7264 against the aussie and 0.6558 against the kiwi at Thursday's close. The greenback is seen finding resistance around 0.70 against the aussie and 0.62 against the kiwi.

The greenback rebounded to 1.2587 against the loonie, after touching 1.2551 at 9:55 am ET, which was its lowest level since April 21. The greenback traded at 1.2569 against the loonie at yesterday's close. Should the greenback rises further, 1.27 is likely seen as its next resistance level.

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