Home The Watchforex news Dollar prices hit 2018 high despite weaker jobs data

Dollar prices hit 2018 high despite weaker jobs data

by nada nasser
Dollar-currency

U.S. dollar prices leaped to its highest levels this year against a basket of currencies on Friday, despite disappointing U.S. employment data for April, according to CNBC.

The U.S. economy added fewer jobs than expected and although the unemployment rate dropped to near a 17-1/2-year low of 3.9 percent, this was because some jobless Americans left the labor force. Average hourly earnings rose 4 cents, or 0.1 percent, last month after gaining 0.2 percent in March. That left the annual increase in average hourly earnings at 2.6 percent.

“It is probably a pause, but it is nothing to stop the market,” said Steven Englander, head of research and strategy at Rafiki Capital in New York.

The data came after the Federal Reserve was also seen as adopting a more dovish tone at the conclusion of its meeting on Wednesday.

“I think next week we are going to see a bunch of Fed speakers expressing confidence in the economy, basically telling the market that they drew the wrong conclusion from the statement,” Englander said.

The dollar index was last up 0.19 percent to 92.59, after earlier in the session hitting 92.899 its highest level since December 28.

The greenback also broke above parity with the Swiss franc. It was last up 0.32 percent against the franc at 1.0006.

The dollar has gained as investors bet that the Federal Reserve will continue raising rates while other central banks including the European Central Bank (ECB) will act more slowly.

“The story in the last few days has been the disappointment over the ECB and the UK to start raising interest rates in the wake of the Fed and unless we see data picking up meaningfully, the dollar will outperform in the coming weeks,” said Gavin Friend, senior markets strategist at NAB in London.

The sharp rise in the dollar in recent weeks – it broke above a 200-day moving average this week for the first time in a year – took hedge funds and other investors by surprise. They had built up record short bets on the dollar and were forced to cover some of those positions, lifting the greenback even more.

Erik Nelson, a currency strategist at Wells Fargo in New York, sees further upside in the greenback as likely limited, however, saying that pessimism over other economies may be overdone.

“I think the economies are strong enough in those countries to keep central banks on track to keep normalizing monetary policy,” Nelson said.

 

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