The U.S. dollar rose more than 1% on Friday (3rd), the most outstanding single-day performance in nearly six months. The January non-farm payrolls report released on the same day was far better than market expectations. The strong job market gave the Federal Reserve (Fed ) more room to raise interest rates and reversed traders’ recent speculation that the Fed is about to stop raising interest rates.
In late New York trading, the ICE U.S. Dollar Index (DXY), which tracks the U.S. dollar against six major currencies, rose 1.12% to 102.92, the highest since Jan. 12 and the biggest gain since Sept. 23 last year.
The U.S. Department of Labor announced on Friday that non-agricultural employment increased by 517,000 in January, far better than the 185,000 economists expected. In December last year, it was revised to 260,000 from the originally announced 223,000. Average hourly wages rose an annualized 4.4 percent in January, moderating from December’s 4.8 percent increase but higher than economists’ forecast of 4.3 percent.
Marc Chandler, chief market strategist at Bannockburn Global Forex, described January’s non-farm payrolls as a “monster number.”
The euro depreciated 0.98% against the dollar to 1.08040, and the pound depreciated 1.39% against the dollar to 1.20550, the lowest since January 6 and the worst single-day performance since December 15 last year.
USD/JPY surged 1.82% to 131.20, the highest since January 18 and the biggest one-day gain since June 17 last year.
After the Fed raised interest rates by 1 yard (25 basis points) as expected on Wednesday, traders began to bet that the Fed might stop raising interest rates at some point, but Friday’s non-farm payrolls report extinguished this possibility.
“After the Fed meeting, the market looked to have the upper hand, still betting the Fed would cut rates, sending yields and the dollar lower, but after 48 hours, I think it now looks like the Fed has the upper hand again,” said Bannockburn’s Chandler.
Fed officials predicted in December that the end-point interest rate would exceed 5 percent and would remain there for some time at a level that constrains economic growth in order to dampen inflation.
After Wednesday’s decision-making meeting, traders originally predicted that the terminal interest rate would be lower than 5%, and that the Fed would start to cut interest rates in the second half of the year, but after Friday’s non-farm payroll report, traders now predict that the terminal interest rate will hit 5.03% in June, up from weekly It was up 4.88 percent on Thursday afternoon.
As the expectation of further interest rate hikes grows stronger, people are also more worried about the economic downturn. Brian Jacobson, senior strategist at Allspring Global Investments, said: “Whenever we see such important data, we will worry about the Fed’s movements again. People may fear that the Fed will push too far and bring not a soft landing of the economy, but a car accident. “
The next piece of economic data that can be used to judge the Fed’s policy path will be the Consumer Price Index (CPI) released on February 14.
As of Friday (3rd) around 6:00 Taiwan time Price:
The dollar index was at 102.9959. +1.23% The euro/dollar (EUR/USD) exchange rate quoted 1 euro to 1.0793 dollars. -1.07% The British pound was trading at $1.2052 to the U.S. dollar (GBP/USD). -1.43% The Australian dollar to the US dollar (AUD/USD) exchange rate quoted 1 Australian dollar to 0.6092 US dollars. -2.20% The U.S. dollar to Canadian dollar (USD/CAD) exchange rate quoted 1 U.S. dollar to 1.3401 Canadian dollars. +0.65% USD/JPY is trading at 131.18 yen to the US dollar. +1.94%