FOREX-Dollar rallies vs euro and yen on strong U.S. jobs data
03/02/2012 at 18:32
* Dollar rallies against the yen and euro on U.S. data * Japanese still prepared to intervene to weaken yen * Aussie dollar climbs to six-month high Updates prices, adds details NEW YORK, Feb 3 Reuters - The dollar gained against the yen and euro on Friday, after a report showed a larger-than-expected gain in U.S. jobs, which could reduce the likelihood of further stimulus by the Federal Reserve anytime soonTo some investors it even suggested the U.S central bank may raise interest rates sooner than it has indicated in recent days. Higher rates will raise the attractiveness of dollar-denominated securities and demand for the dollars to buy them
The report showed a rise of 243,000 jobs in U.S. nonfarm payrolls in January, while the unemployment rate unexpectedly fell to 8.3 percent from 8.5 percent . Analysts were forecasting a gain of 150,000 jobs in January and the unemployment rate to hold steady, according to a Reuters poll
A separate report showing greater-than-expected expansion in the U.S. services sector in January only added to the dollar's allure.
"It's certainly supportive of the U.S. recovery and suggests that labor market momentum is gathering pace," said Brian Dolan, chief market strategist at Forex.com in Bedminster, New Jersey. "From a trading standpoint, it's positive for risk, but it also lowers the prospects for QE3, which is dollar-positive," he added, referring to the Fed's quantitative easing program
The euro last traded at $1.3114, down 0.2 percent, after touching a session low of $1.3065
Before the report, traders had said a strong jobs report would weaken the yen, as some of the currency's recent strength has come from dollar weakness after the Fed's pledge to keep interest rates low until the end of 2014
After Friday's data, traders began betting the Fed will raise interest rates earlier in 2014
Interest rate futures contracts expiring in April 2014 suggested a 36 percent chance of a rate hike by then, after signaling no chance before the report. Most traders saw June as the most likely month for a first rate hike. Before the report, traders saw the first hike as most likely in August 2014
Despite the jobs report excitement, investors remained on full alert for intervention by Japanese authorities, with the dollar still close to its record low touched last October against the yen
Japanese Finance Minister Jun Azumi said on Friday that speculative yen buying had gathered pace since last week and repeated that he was ready to act decisively to counter "one-sided" moves
GREECE CONCERNS Meanwhile, investors are still awaiting the outcome of talks between Greece and its private creditors on a debt swap
Greek officials have said repeatedly that a deal is near, and European Union Economic and Monetary Affairs Commissioner Olli Rehn reiterated on Thursday that it could be reached by the end of the week
"In the very short-term, people will be reluctant to take positions in the euro as there is a lot of announcement risk surrounding Greece," said Daragh Maher, currency strategist at HSBC in London
The euro hit a six-week high in the last week, stalling ahead of resistance at $1.3235, the 38.2 percent retracement of the euro's fall from October to January, using Reuters data
Against the Swiss franc, the euro was up 0.1 percent at 1.2062 francs
SNB interim head Thomas Jordan was reported on Thursday as saying the central bank would enforce the minimum Swiss franc exchange rate against the euro "with the utmost determination."
Top Swiss politicians on Friday spoke out in favor of the central bank's cap of 1.20 per euro on the Swiss franc, saying it was the bare minimum needed to cushion the economy
Demand for short-dated downside options with strikes below the 1.20 franc peg has picked up, with some investors betting the floor could break in the coming days as the euro comes under more pressure and investors seek the safety of the franc. The Australian dollar
Multimedia versions of Reuters Top News are now available for: * 3000 Xtra: visit * BridgeStation: view story .134 For more information on Top News: Reporting By Nick Olivari; Additional reporting by Steven C. Johnson; editing by Andrea Evans nick.olivari@thomsonreuters.com1-646-223-6151Reuters Messaging: nick.olivari.reuters.com@reuters.net Currency bid prices at 11:37 a.m. EST 1637 GMT. All data taken from Reuters calculated from the levels at 4:30 p.m.2130 GMT in the previous New York session. Last US Close Pct YTD Pct 2011 Feb. 2 Change Change Close ------------------------------------------------------------- Euro/dlr
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