- U.S. payrolls exceed expectations in June
- Price of interest rate futures up 75 bps
- Yen in focus while former Prime Minister Abe was shot down
NEW YORK, July 8 (Reuters) – The US dollar fluctuated slightly against a basket of currencies on Friday before the weekend after a turbulent session in which the green dollar recorded gains and losses after the data showed that the world’s largest economy created more jobs than expected in June.
The report consolidated expectations of another 75 basis point rise at the Federal Reserve policy meeting later this month.
U.S. non-farm payrolls rose 372,000 jobs last month, the Labor Department said Friday. Economists surveyed by Reuters had forecast 268,000 jobs added last month. Read more
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At the start of the session, the greenback hit a new two-decade high against a basket of currencies, led by gains against the euro amid signs that the eurozone economy will sink into recession. The dollar has hit 20-year highs this week, gaining in five of the past six weeks.
In the afternoon, the dollar index remained last flat at 106.96.
Fed fund futures are priced at more than a 90% chance of raising rates by 75 bp this month, with about 187 bp of hardening accumulated at the end of the year. This rose from 181 bp on Thursday afternoon.
“Solid U.S. data, particularly stronger-than-expected current payrolls, and the persistent rhetoric of FOMC (Federal Open Market Committee) officials reinforced the growing divergence between increasingly bleak prospects in Europe. and the toughest American economy, ”Jonas Goltermann wrote. , senior market economist, at Capital Economics.
That said, some economists noted that a deeper look at the employment report showed that the suggested headline was not as strong.
Bernard Baumohl, chief global economist at The Economic Outlook Group, said in a report that the data reveal “an economy that is already in transition to slower growth.”
He said he sees new indications that employers became more cautious in June, hiring 30% fewer workers in the second quarter than in the first three months of the year and a drop of more than 10% from same spring quarter a year ago.
“And if we look at the three-month payroll total, the period that ended in June was the slowest since February 2021. Will the Fed realize that?”
With jobs out of the way, investors are now concentrating on Wednesday’s inflation report.
According to a Reuters poll, economists predict that the year-on-year consumer price index will reach a new 40-year high of 8.8% in June. However, the monthly underlying index is seen falling to 5.8% from 6.0% in May.
The euro was also on the radars of investors. The currency was down about 3% against the dollar this week as investors worry about the economic impact of an energy crisis caused by the uncertainty of gas supply from Russia. The euro rose 0.1% for the last time to $ 1.0176. Read more
Against the yen, the dollar gained 0.1% to 136.07 yen.
Demand for safe havens rose briefly on Friday after former Japanese Prime Minister Shinzo Abe was shot while campaigning for a parliamentary election. Abe, Japan’s oldest leader, died Friday. Read more.
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Currency bid prices at 15:40 (1940 GMT)
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Report by Gertrude Chavez-Dreyfuss in New York; Edited by Jonathan Oatis
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