© Shutterstock The dollar jumps after the US labor market data, will it achieve gains this week?
Arabictrader.com – The US dollar jumped strongly during the last days of the week, Friday, after the release of the main employment data and the unemployment rate in the United States, which were very positive and came as a big surprise to investors in the currency market today.
This came after the US dollar maintained its movements in a narrow range since early trading in the Asian session and throughout the day, as investors were awaiting the release of labor market data, amid a bank holiday in both the United States and Europe, and a significant decrease in liquidity.
The most important factors that affected the movements of the dollar
It extended its gains following the issuance of the very positive US labor market data, to approach the level of 102.3 points, surpassing the impact of the negative data that was issued throughout the week regarding the slowdown in economic activity in the United States.
The data released just recently showed that the unemployment rate in the United States declined to 3.5% during the month of March, contrary to expectations that it would remain at 3.6%, which it recorded in the previous month.
This coincided with the economy adding a number of jobs that exceeded expectations. Recording 236 thousand jobs, although it is less than the jobs added by the economy last month, which recorded 326 thousand jobs, after it was revised highly.
The strength of the non-farm payrolls data renewed investors’ bets that the US Federal Reserve may continue to raise interest rates by 25 basis points at its May meeting, rather than keeping them unchanged.
And the FEDWATCH tool for monitoring interest rate expectations showed an increase in bets that the US Federal Reserve will raise interest rates by 25 basis points to 5.25%, to become 64.3%, after it had reached 51% before the release of the data, which led to a strong rise in the dollar.
Before the release of the data, the tool indicated that interest rate hike expectations are almost equal to expectations that the Federal Reserve will decide to keep it unchanged, in light of the slowdown in inflation data, and expectations that the Fed may limit monetary tightening to avoid spreading a liquidity crisis in the banking sector.
At the same time, the dollar also received support from the strong rise in yields following the release of labor market data today, as well as the continuation of geopolitical tensions that increased the demand for the dollar as a safe haven.
However, expectations about a potential US economic recession still limit the size of the dollar’s gains, as the ISM PMI data, the ADP private sector jobs report, and the JOLTS job vacancies and business turnover report released during this week were negative, reflecting the impact on the economy from the tightening. strong monetary policy.
Despite the significant rise witnessed by the dollar today, it is still on the way to incur its fifth weekly losses in a row, as its weekly losses amounted to about 0.12% so far, compared to its closing level of trading last Friday.
dollar now
In terms of trading, the dollar index – which measures the performance of the US currency against a basket of 6 other major currencies – rose during the day’s trading by about 0.20%, to record 102.142 points.
As for its trading against the other major currencies, it fell by 0.15%, to record $1.0901, and it fell against the dollar by about 0.25%, to $1.2407.
At the same time, against safe havens, the Japanese rose by 0.33% to 132.20 yen, and the Swiss rose by 0.19%; Recording 0.9064 francs.
As for its performance against commodity currencies, it stabilized against its US counterpart at $0.6672, while the New Zealand dollar rose against the US dollar by 0.1% to $0.6250, while the US dollar rose against its Canadian counterpart by about 0.13% to $1.3509 Canadian dollars.
