Dollar steadies, on track for weekly loss after job growth blowout
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[April 06, 2024] By
Hannah Lang
NEW YORK (Reuters) -The dollar strengthened on Friday but was still set
for a weekly loss after data showed U.S. employers hired far more
workers than expected in March, potentially delaying anticipated
interest rate cuts from the Federal Reserve this year.
Nonfarm payrolls increased by 303,000 jobs last month, the Labor
Department said in its closely watched employment report on Friday.
Economists polled by Reuters had forecast 200,000 jobs, with estimates
ranging from 150,000 to 250,000.
The dollar index was last up 0.048% at 104.27, after rising to 104.690
It has had a turbulent week, falling from a five-month high to a
two-week low after an unexpected slowdown in U.S. services growth
supported expectations of Fed rate cuts.
U.S. interest rate futures pared back the odds of a rate cut in June to
54.5% after the release of the jobs report, according to CME Group's
FedWatch tool.
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"It's really encouraging the market to get more and more comfortable
with this fact that we know rates have to come down, but do they really
need to come down quickly? And do they need to come down as much?" said
Amo Sahota, director at Klarity FX in San Francisco.
Investors have reeled in expectations of how much the Fed might cut
rates this year, with U.S. rate futures now pricing in two cuts in 2024.
"That should continue to underpin dollar strength on a broad basis,"
said Brad Bechtel, global head of FX at Jeffries.
But economic strength and higher prices of commodities, including oil,
copper, coffee and cocoa, is complicating the inflation picture.
The dollar rebounded after comments on Thursday from Minneapolis Fed
President Neel Kashkari, a non-voter on this year's policy-setting
committee, that rate cuts might not be required this year if inflation
continues to stall.
Against the dollar, the Japanese yen weakened 0.14% to 151.540.
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Euro, Hong Kong dollar, U.S. dollar, Japanese yen, pound and Chinese
100 yuan banknotes are seen in this picture illustration, January
21, 2016. REUTERS/Jason Lee/Illustration/File Photo
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Japanese authorities have continued to push back against excessive
currency weakness, and will likely intervene to buy the yen if it
breaks well below 152 per dollar, former top Japanese currency
official Tatsuo Yamazaki said on Thursday.
Japanese Finance Minister Shunichi Suzuki on Friday reiterated the
government's resolve to take appropriate action against sharp yen
falls.
Bank of Japan Governor Kazuo Ueda said the Japanese central bank
could "respond with monetary policy" if weakness in the yen affected
the nation's economy in ways that are hard to ignore, the Asahi
newspaper reported on Friday.
Ueda also said inflation would likely accelerate from "summer toward
autumn" as bumper pay hikes push up prices, his strongest hint yet
that another interest rate hike was possible in coming months.
Elsewhere, the euro was last flat at 1.0837, while sterling eased
0.04% to 1.264. The Aussie was last down 0.08% to 0.658.
In cryptocurrencies, bitcoin fell 0.53% to $67,589, while ether was
$3,328.7, up 0.09%.
(Reporting by Hannah Lang in New York; additional reporting by
Amanda Cooper in London and Brigid Riley in Tokyo; Editing by Jamie
Freed, David Evans, Chizu Nomiyama, Paul Simao and Richard Chang)
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