Published On : 05/05/2023

Dollar jumps as U.S. job gains, wage growth beat expectations

By Karen Brettell

NEW YORK (Reuters) – The dollar jumped on Friday after data showed that U.S. employers added more jobs than expected in April, while wages also grew more than economists’ anticipated.

Employers added 253,000 jobs, above economists’ forecasts for a gain of 180,000. U.S. average hourly earnings rose at an annual rate of 4.4%, above expectations for a 4.2% increase.

But data for March was also revised lower to show 165,000 jobs added instead of 236,000 as previously reported.

“I think the headline number is probably not as strong as it looks given the backward revisions,” said Vassili Serebriakov, an FX strategist at UBS in New York.

Friday’s jump in the dollar after the data is also likely in part due to investors who were short the greenback, or betting it would fall, covering their positions, he added.

The dollar has fallen from a 20-year high last September as investors adjust for the likelihood that the Federal Reserve is at or near the end of its tightening cycle and may begin cutting interest rates if the economy continues to slow.

While the U.S. economy is slowing, however, there are still pockets of strength, which is making investors hesitant to get too bearish on the currency for now.

In the near term it’s hard to get a lot of momentum until we have a more clear directional signal from U.S. data,” said Serebriakov. “For us the resolution ultimately is for consistently weaker U.S. data and a weaker dollar ultimately and a more dovish Fed.

Fed funds futures traders are pricing in around 78 basis points of cuts by year-end. The Fed raised rates by 25 basis points to 5% to 5.25% on Wednesday and dropped from its policy statement language saying that it “anticipates” further rate increases would be needed.

The dollar index hit a session high of 101.77 and the euro fell to $1.0967. The dollar also jumped to 135.13 against the Japanese yen.

Inflation data due next week is the next major U.S. economic focus.

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Currency bid prices at 9:26AM (1326 GMT)

Description RIC Last U.S. Close Pct Change YTD Pct High Bid Low Bid

Previous Change

Session

Dollar index 101.5800 101.3400 +0.24% -1.846% +101.7700 +101.1100

Euro/Dollar $1.0986 $1.1014 -0.25% +2.53% +$1.1048 +$1.0967

Dollar/Yen 134.8500 134.2650 +0.44% +2.85% +135.1150 +133.8800

Euro/Yen 148.14 147.87 +0.18% +5.60% +148.2700 +147.6900

Dollar/Swiss 0.8943 0.8859 +0.95% -3.28% +0.8972 +0.8836

Sterling/Dollar $1.2583 $1.2575 +0.09% +4.07% +$1.2634 +$1.2559

Dollar/Canadian 1.3461 1.3540 -0.58% -0.64% +1.3539 +1.3460

Aussie/Dollar $0.6713 $0.6694 +0.31% -1.50% +$0.6744 +$0.6689

Euro/Swiss 0.9823 0.9756 +0.69% -0.73% +0.9849 +0.9754

Euro/Sterling 0.8729 0.8759 -0.34% -1.30% +0.8767 +0.8730

NZ $0.6271 $0.6279 -0.09% -1.20% +$0.6316 +$0.6265

Dollar/Dollar

Dollar/Norway 10.6040 10.6910 -0.80% +8.07% +10.6870 +10.5800

Euro/Norway 11.6480 11.7663 -1.01% +11.00% +11.7903 +11.6497

Dollar/Sweden 10.2140 10.2431 -0.53% -1.86% +10.2621 +10.1849

Euro/Sweden 11.2210 11.2807 -0.53% +0.64% +11.2945 +11.2213

(Reporting by Karen Brettell; Editing by Toby Chopra and Jonathan Oatis)

Jessica Weisman-Pitts

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