Forex-Dollar Remains Positive On The Solid Us Job Market
Why is the U.S. dollar still so strong?
On Friday, the dollar maintained at a one-month high as US economic data revealed a still-tight labor market, which might keep the Federal Reserve on its aggressive rate rise path.
According to figures released on Thursday, the number of Americans submitting new applications for unemployment benefits fell to a three-month low last week, while layoffs plunged 43% in December.
According to a second study, private employment climbed by 235,000 jobs last month, considerably above predictions of a 150,000 gain.
The US dollar index rose 0.9% against a basket of currencies overnight, reaching a nearly one-month high of 105.27. It was recently 0.03% higher at 105.15, on track for the greatest weekly rise since September of more than 1.5%.
"All of the tales about job losses in the IT industry have yet to be reflected in the overall employment statistics, which implies that although there is weakness in some pockets...there is still significant demand for employees from other sections of the economy," said Khoon Goh, ANZ's head of Asia research.
The greenback's advance overnight pushed the sterling to a six-week low of $1.1873. It was recently up 0.12% at $1.1922.
Similarly, the euro fell 0.8% the previous day to a more than three-week low of $1.0515 and was last stable at $1.0519.
The dollar gained 0.6% against the Japanese yen overnight, reaching a one-week high of 134.045 yen, and last purchased at 133.44 yen.
Markets are now focusing on the carefully awaited nonfarm payrolls data, which is coming later on Friday, with analysts surveyed by Reuters estimating the US economy gained 200,000 jobs in December.
"We might be in for a pleasant surprise," Goh said. "This will keep the Fed steadfast in raising rates."
The euro zone's flash inflation data for December will also be released on Friday, with an annual inflation rate of 9.7% expected.
Inflation in Germany, France, and Spain already slowed last month, suggesting that eurozone inflation may fall short of forecasts.
"The low inflation data, as well as all the shocks," said Ray Attrill, head of FX strategy at National Australia Bank.
"However, in terms of trade, the recent downturn in oil and gas prices that we've seen is quite favorable for eurozone growth prospects...so I would anticipate the euro to get more support from that than it has."
In other developments, the Australian dollar was recently 0.07% higher at $0.6757, after falling 1.3% in the previous session and erasing much of the gains it gained earlier in the week on reports that China had loosened limits on Australian coal imports.
Following a 1% drop on Thursday, the kiwi gained 0.02% to $0.6224, putting it on course for an almost 2% weekly loss, its worst since September.