The dollar rose against all major currencies on Friday after data showed employers added far more jobs than expected in January, reducing the likelihood of Federal Reserve rate cuts in the near term.
The non-labour force population rose by 353,000 last month, exceeding economists’ expectations for an increase of 180,000. Average hourly wages rose 0.6% after a 0.4% increase in December.
Expectations were blown away, said Marc Chandler, chief market strategist at Bannockburn Global Forex in New York. The market has further reduced the likelihood of a cut in March and the number of cuts [dat de Fed dit jaar verwacht] reduced.
The dollar has weakened in recent days in line with falling Treasury yields, even after Fed Chairman Jerome Powell said Wednesday that a March rate cut was unlikely. Treasuries have benefited from demand for safe havens amid renewed concerns about the financial health of US regional banks.
But much of the move in bonds and the dollar also reflects a repositioning, following a strong January for the greenback and higher Treasury yields during the month.
After a big move through most of January, I’d say there was some positional adjustment, Chandler said, adding that I look forward to a firmer dollar tone after Friday’s jobs numbers.
The dollar index last stood at 103.73, up from around 103.00 before the data and 0.67% higher on the day. The euro fell to $1.08065 from around $1.08830 previously. The greenback rose to 147.86 yen from around 146.65 before the numbers.
Traders are now pricing in an 18% chance of a rate cut in March, up from 38% on Thursday, and a 67% chance for May, up from 94%, according to CME Groups’ FedWatch Tool.