A woman counts US dollar bills at her home in Buenos Aires, Argentina August 28, 2018. – Reuters pic
Saturday, 06 Aug 2022 11:29 AM MYT
NEW YORK, Aug 6 — The dollar rallied across the board on Friday, notching its biggest daily percentage gain since mid-June against the yen, after a stronger-than-expected US payrolls report suggested the Federal Reserve may need to continue aggressively raising interest rates in the near term.
The US dollar index, which measures the greenback against a basket of currencies, sharply extended gains following the report, which showed nonfarm payrolls increased by 528,000 jobs last month, the largest gain since February. That was well above economists’ expectations.
The dollar index, which remains below its mid-July high, was last up 0.8 per cent at 106.57. It was up about 0.2 per cent just before the release of the US Labour Department’s employment report. The index was up about 0.6 per cent for the week.
“This is a much stronger report than was expected. What it means is the Fed cannot pivot at this point. The Federal Reserve has to continue to hike rates. The folks who are saying let’s take it more slowly are being shoved aside here with this report,” said Axel Merk, president and chief investment officer at Merk Investment in Palo Alto, California.
“The dollar is stronger against almost everything. The US is performing when the general mood is that the world is slowing down.” Against the yen, the dollar was last up 1.5 per cent at ¥134.99. For the week, the dollar was up 1.3 per cent against the yen.
The Fed last week raised its policy rate by three-quarters of a percentage point. The US central bank has raised that rate by 225 basis points since March, but investors had been assessing recently whether the Fed might be less aggressive in hiking rates in the future. The dollar index is up more than 11 per cent for the year so far amid the outlook for higher rates.
Sterling was down 0.8 per cent against the dollar at US$1.2066 (RM5.38), a day after the Bank of England (BoE) raised rates by the most in 27 years to fight surging inflation and warned that a long recession would begin in the fourth quarter of this year.
The euro was down 0.7 per cent against the greenback at US$1.0178.
In cryptocurrencies, bitcoin was last up 1.2 per cent at US$22,886.45. — Reuters