U.S. Dollar Rising After U.S. Job Growth Beats Expectations

The U.S. dollar edged higher against a basket of currencies on Friday after a better-than-expected U.S. jobs report indicated a tight labor market that could lead the U.S. Federal Reserve to opt for interest rate hikes. interest.

Nonfarm payrolls increased by 390,000 jobs last month, the US Department of Labor said in its closely watched jobs report on Friday.

Economists polled by Reuters had forecast a payroll increase of 325,000 jobs.

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The U.S. dollar currency index, which tracks the greenback against six other major currencies, rose 0.34% to 102.17, gaining 0.49% from the previous week.

The better-than-expected job gain is another sign that the economy is still strong, while wage growth is beginning to moderate amid a rebound in the labor force, wrote Michael Pearce, senior economist at Capital Economics. , in a footnote.

“With wage growth still well above rates consistent with the Fed’s 2% inflation target, that won’t stop the Fed from continuing to raise rates by 50 basis points at the next meeting or of the next two,” Pearce wrote.

The Fed has raised interest rates by three-quarters of a percentage point this year, and most Fed policymakers support raising interest rates by another half-percentage point each of their two next meetings.

Calling high inflation the U.S. central bank’s “number one challenge,” Fed Vice Chair Lael Brainard said on Thursday she backed at least two more half-a-day interest rate hikes. percentage point, and more if price pressures do not ease.

Investors have mixed views on the greenback, which is still near two-decade highs against a basket of peers.

George Saravelos, global head of forex research at Deutsche Bank, said the US dollar “is pricing a safe-haven risk premium that is so extreme that it has rarely persisted over time and is now unraveling. “.

Bullish analysts say the Fed’s tightening cycle is based on a stronger growth story than Europe’s, especially after the Russian oil embargo, which could hurt the eurozone economy .

As Taiwan celebrated the Dragon Boat Festival holiday on Friday, the New Taiwan Dollar last closed NT$0.118 at NT$29.388 against the greenback on Thursday, down 0.13% from Friday the last week.

The U.S. dollar rose 0.5% to an over-three-week high of ¥130.46, with the Japanese currency not far off the two-decade low hit last month as the Bank of Japan (BOJ ) stuck to its ultra-low interest rate policy. position.

BOJ Governor Haruhiko Kuroda – who said the bank would not reverse its monetary stimulus because the recent rise in inflation was mainly driven by commodity costs and was likely temporary – said on Friday that it was undesirable for prices to increase too much when household income growth remained low.

Additional reports by staff writer

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