Get 40% Off
🚀 Our AI Picked 6 Stocks that Jumped +25% in Q1. Which Picks Will Soar in Q2?Unlock full list

Dollar jumps, traders pare rate cut bets after strong jobs report

Published 02/01/2024, 08:01 PM
Updated 02/02/2024, 04:02 PM
© Reuters. FILE PHOTO: Iranian rials, U.S. dollars and Iraqi dinars are seen at a currency exchange shopÊin Basra, Iraq November 3, 2018. Picture taken November 3, 2018. REUTERS/Essam al-Sudani/File Photo

By Karen Brettell

NEW YORK (Reuters) -The U.S. dollar index jumped to a seven-week high in a broad rally on Friday after data showed that employers added far more jobs in January than expected, reducing the chances of near-term Federal Reserve interest rate cuts.

Nonfarm payrolls increased by 353,000 last month, beating economists' expectations for a gain of 180,000. Average hourly earnings increased 0.6% after rising 0.4% in December.

It “blew away expectations,” said Marc Chandler, chief market strategist at Bannockburn Global Forex in New York. “The market has further cut the chances of a March cut and reduced the amount of cuts (it expects) the Fed will deliver this year.”

The dollar had weakened in recent days in line with falling Treasury yields, even after Fed Chair Jerome Powell on Wednesday said that a March rate cut was unlikely.

Treasuries benefited from safe haven demand due to renewed concerns about the financial health of U.S. regional banks. But these concerns eased on Friday as U.S. regional bank stocks recovered slightly from a brutal two-day sell-off, helping send yields higher.

Recent moves in the dollar and Treasury yields in large part also reflect repositioning, following a strong January for the greenback and higher Treasury yields during the month.

“After a big move in most of January, I would say there was some position adjusting,” said Chandler. After Friday's data, however, “I’m looking for a firmer dollar tone,” he added.

The dollar index reached 104.04, the highest since Dec. 12. The euro fell to $1.07810, holding just above the $1.07800 level reached on Thursday, which was the weakest since Dec. 13. The greenback rose to 148.58 yen, just below the 148.80 level reached on Jan. 19, which was the highest since Nov. 28 .

Traders are now pricing in a 21% chance of a rate cut in March, down from 38% on Thursday, and a 75% probability for May, down from 94%, according to the CME Group’s FedWatch Tool.

Sterling fell to $1.26140, the lowest since Jan. 17. The British currency had gained on Thursday after the Bank of England kept interest rates at a nearly 16-year high on Thursday and pushed back against the likelihood of near-term rate cuts.

The Australian dollar fell to a 10-week low of $0.65035.

© Reuters. FILE PHOTO: Iranian rials, U.S. dollars and Iraqi dinars are seen at a currency exchange shopÊin Basra, Iraq November 3, 2018. REUTERS/Essam al-Sudani/File Photo

The Aussie has been trying to stage a short-term bullish reversal at "critical support" near $0.65, JPMorgan analysts Jason Hunter and Marko Kolanovic said on Friday in a report. If it fails to break above resistance at $0.664 to $0.6657 and sees further weakness it may next test support at the $0.617 to $0.6296 area, they said.

In cryptocurrencies, bitcoin fell 0.19% to $43,020.

Latest comments

Many are saying these are likely second jobs people are taking to be able to afford to live.  True?
Some of my cash came out of its long term high yield stash on this Groundhog Day. It looked around, but it didn't see any good opportunities for investment.....so, it went back into another long term high yield stash account.
Risk Disclosure: Trading in financial instruments and/or cryptocurrencies involves high risks including the risk of losing some, or all, of your investment amount, and may not be suitable for all investors. Prices of cryptocurrencies are extremely volatile and may be affected by external factors such as financial, regulatory or political events. Trading on margin increases the financial risks.
Before deciding to trade in financial instrument or cryptocurrencies you should be fully informed of the risks and costs associated with trading the financial markets, carefully consider your investment objectives, level of experience, and risk appetite, and seek professional advice where needed.
Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. The data and prices on the website are not necessarily provided by any market or exchange, but may be provided by market makers, and so prices may not be accurate and may differ from the actual price at any given market, meaning prices are indicative and not appropriate for trading purposes. Fusion Media and any provider of the data contained in this website will not accept liability for any loss or damage as a result of your trading, or your reliance on the information contained within this website.
It is prohibited to use, store, reproduce, display, modify, transmit or distribute the data contained in this website without the explicit prior written permission of Fusion Media and/or the data provider. All intellectual property rights are reserved by the providers and/or the exchange providing the data contained in this website.
Fusion Media may be compensated by the advertisers that appear on the website, based on your interaction with the advertisements or advertisers.
© 2007-2024 - Fusion Media Limited. All Rights Reserved.