Dollar gains as strong jobs data boosts Fed hike bets
An employee of a bank counts US dollar notes at a branch in Hanoi, Vietnam May 16, 2016. REUTERS/Kham
Get access to the best calls on Wall Street with StreetInsider.com's Ratings Insider Elite. Get your Free Trial here.
By Karen Brettell
NEW YORK (Reuters) - The U.S. dollar gained against a basket of currencies on Monday after a stronger-than-anticipated jobs report for July on Friday raised expectations that the Federal Reserve is closer to raising interest rates.
Nonfarm payrolls rose by 255,000 jobs in July, more than the Reuters forecast of 180,000 for the month, and wages picked up, with hiring broadly based across the sectors of the economy.
The data helped offset concerns about sluggish economic indicators, including preliminary estimates of weak gross domestic product for the second quarter, released in late July.
"Friday’s employment report was extremely strong and I think that’s hardened the conviction of investors who view the U.S. economy as strongly outperforming other countries," said Kathy Lien, managing director at BK Asset Management in New York.
The dollar index, which tracks the greenback against a basket of six major rivals, gained 0.21 percent to 96.293. The dollar was up 0.62 percent against the Japanese yen at 102.44.
Higher yielding currencies also gained on Monday as investors looked for higher returns. The Australian dollar gained 0.38 percent against the greenback to $0.7652.
Trading this week is expected to be relatively light, with many traders and investors on summer vacations. Friday’s retail sales report for July will be the next major U.S. economic focus.
A speech by Fed Chair Janet Yellen at the central bank's symposium in Jackson Hole, Wyoming, on Aug. 26 is also anticipated for any new indications on when an interest rate increase may be likely.
Most economists and investors see a U.S. rate hike as most likely in December, and believe the Fed will be hesitant to act before the U.S. presidential election in November.
“(Payrolls) supported the growth outlook on the U.S. side but doesn’t really move the needle that much on a September rate hike,” said Mark McCormick, North American head of FX strategy at TD Securities in Toronto.
The Fed stands apart from central banks from Japan to Europe, which have been easing as they attempt to stimulate growth and stave off deflation.
The Reserve Bank of New Zealand is likely to be the next central bank to ease conditions on Thursday, when it is expected to cut rates by 25 basis points to 2.00 percent.
The kiwi was little changed against the U.S. dollar on the day at $0.7137, after earlier weakening to $0.7088.
(Editing by Lisa Von Ahn and Chizu Nomiyama)
Serious News for Serious Traders! Try StreetInsider.com Premium Free!
You May Also Be Interested In
- Wholesale Inventories (Sep P) 0.2% vs 0.1% Expected
- UPDATE: API Crude Inventory +4.8M Barrels
- China's Offshore Yuan Falls to Weakest Level on Record - Bloomberg
Create E-mail Alert Related CategoriesETFs, Forex, Reuters
Related EntitiesNonfarm Payrolls
Sign up for StreetInsider Free!
Receive full access to all new and archived articles, unlimited portfolio tracking, e-mail alerts, custom newswires and RSS feeds - and more!