Dollar up as US jobs data leaves Fed rate hike in play
If Yellen gives those signals, he said, it could be positive for the dollar in the short term
NEW YORK (AFP) - The dollar climbed against the euro Friday after a US jobs report showed that unemployment ticked lower and wage growth rose, supporting the Federal Reserve s plan to raise interest rates.
The keenly awaited January jobs report, the first since the Fed began raising rates in December, delivered mostly positive news, apart from a slowdown in job creation.
The dollar initially fell on the 151,000 jobs added, but bounced higher as traders looked beyond the weaker-than-expected headline number and to a fall in the jobless rate to 4.9 percent from 5.0 percent in December.
Around 2200 GMT, the greenback was trading 5.1 percent higher against the euro at $1.1158. It also rose against the yen and the pound, but slipped a tick on the Swiss franc.
"Although job growth slowed materially in the month of January, the greenback traded higher against most of the major currencies on the back of a lower unemployment rate and higher wages," said Kathy Lien of BK Asset Management.
"The Federal Reserve may be worried about global market volatility and low commodity prices but it will be difficult for them to ignore an unemployment rate below five percent and earnings growth at its strongest level in a year," she said.
Traders were looking ahead to Fed Chair Janet Yellen s twice-yearly testimony to Congress on Wednesday and Thursday on the state of the US economy and monetary policy.
Her testimony "will be important as it will provide a good opportunity for the Fed to give indications of how much the Fed s outlook has been affected by weak data and the tightening of financial conditions," said Charles St-Arnaud of Nomura Global FX Research.
"Our economist expects her remarks to suggest the Fed has downgraded somewhat its economic assessment to incorporate the economic data received since the December FOMC, but that she will remain cautiously optimistic on the medium-term outlook."
If Yellen gives those signals, he said, it could be positive for the dollar in the short term.
