The Dollar Jumps to a Seven-Week High After Strong Jobs Report
New York Braces for Strong Dollar Rally
The dollar soared to a seven-week high in a broad rally on Friday following the release of data showing that employers added far more jobs in January than anticipated. This development significantly diminished the likelihood of near-term Federal Reserve interest rate cuts.
Nonfarm Payrolls Exceed Expectations
Nonfarm payrolls surged by 353,000 last month, surpassing economists’ predictions of a gain of 180,000. Additionally, average hourly earnings rose by 0.6%, following a 0.4% increase in December.
Market Reactions to the Data
“It blew away expectations,” stated Marc Chandler, chief market strategist at Bannockburn Global Forex in New York. The market has subsequently reduced the chances of a March rate cut and scaled back expectations for the number of cuts the Fed will implement this year.
Repositioning in the Market
Recent movements in the dollar and Treasury yields largely reflect repositioning following a robust January for the greenback and higher Treasury yields during the month.
Impact on Global Currencies
The dollar reached 104.04, its highest level since December 12. The euro fell to $1.07810, hovering just above the $1.07800 level reached on Thursday, which was the weakest since December 13. The greenback also rose to 148.58 yen, just below the 148.80 level reached on January 19, its highest since November 28.
Traders’ Responses
Traders are now pricing in a 21% chance of a rate cut in March, down from 38% on Thursday, and a 75% probability for May, down from 94%, according to the CME Group’s FedWatch Tool.
Market Speculations and Predictions
Sterling fell to $1.26140, the lowest since January 17, while the Australian dollar plummeted to a 10-week low of $0.65035.
Cryptocurrency Market Movements
In the cryptocurrencies market, bitcoin fell 0.19% to $43,020.
Expert Analysis on Cryptocurrency Trends
The Australian dollar has been attempting to stage a short-term bullish reversal at “critical support” near $0.65, according to JPMorgan analysts Jason Hunter and Marko Kolanovic. If it fails to break above resistance at $0.664 to $0.6657 and experiences further weakness, it may next test support at the $0.617 to $0.6296 area.
