US Dollar Still Soaring Following Huge Jobs Report

The US dollar leaped on Friday after data showed that US employers added significantly more jobs in January than economists expected, possibly paving the way ahead before the American central bank to add further interest rate hikes in coming monetary policy meetings.

The Labour Department’s closely monitored NFP report showed that nonfarm payrolls soared to 517,000 jobs in January. The department’s revised data for December 2022 was higher to indicate 260,000 jobs added instead of the previously reported 223,000.

Average hourly earnings rose 0.3% after gaining 0.4% in December. That lowered the year-on-year increase in wages to 4.4% from 4.8% in December. Economists polled by Reuters had forecast a gain of 185,000 jobs and a 4.3% year-on-year jump in wages.

It is a huge figure by any scale, this is why the dollar was last up 1.12% at 102.92 on the day against a basket of currencies, the highest since Jan. 12 and it is on track for its best day since September 23.

On the European front; the Euro fell 0.98% to $1.08040. The dollar gained 1.82% against the Japanese yen to 131.20, the highest since Jan. 18 and is on track for its best day since June 17. The Pound Sterling fell 1.39% to $1.20550, the lowest since January 6 and its worst day since December 15.

The surprisingly strong payrolls figure reversed the forex market’s movement from Wednesday when traders’ hopes held on the idea that the Fed could stop hiking borrowing costs after a widely expected 25-basis-point increase in March.

After the FOMC meeting it looked like markets had the advantage upon the assumption that since interest rates are taken down, accordingly the dollar could be brought down as well, this assumption even drove some analysts to speak about a prolonged decline in the US dollar and now only 48 hours later the Fed seems to have the upper hand again.