The dollar jumps on employment to its highest this week

NEW YORK / LONDON, Aug.6 (Reuters) – The dollar doubled its earlier gain on Friday after a U.S. government report showed employment rose more than expected, pushing bond yields higher and strengthening the case for a more rapid tightening of US monetary policy.

The dollar index against major currencies rose 0.49% to 92.678 at 9:52 am ET (1352 GMT).

The report showed that the non-farm payroll increased by 943,000 jobs in July. Economists polled by Reuters had forecast a gain of 870,000. Read more

The news rekindled the dollar’s momentum from the middle of the week when Federal Reserve Vice Chairman Richard Clarida suggested the conditions for an interest rate hike could be in place as soon as the year ends. 2022.

Fed officials have said improving employment is key as they begin to withdraw further from the additional support provided to the economy during the pandemic.

Clarida’s remarks lifted Treasury yields after five weeks of decline while “real” yields, excluding inflation, are expected to break a six-week streak of decline.

The yield on the 10-year Treasury bill rose to 1.29%, from 1.179% on Monday.

Against the euro, the dollar appreciated to $ 1.1772, up 0.5%. The euro was put under pressure earlier in the day by weaker than expected German industrial order data.

The greenback rose to 110.25 Japanese yen.

The British pound fell 0.3% to $ 1.3888.

Expectations for a significant number of jobs in the United States rose somewhat on Thursday when initial claims for state unemployment benefits fell from 14,000 to 385,000 in the week ended July 31 . read more

Analysts have warned that markets will be looking for more evidence that US yields are significantly higher again. Friday’s yield was still almost half a percentage point lower than at the end of March.

Reactions to monthly jobs reports changed most often this year in the days after the data was released, Wells Fargo Securities strategists found when examining 10-year Treasury yields.

Large exchange rate movements are unlikely until Federal Reserve officials make it clear that they are ready to lead other central banks to withdraw economic support, said Joseph Trevisani, senior analyst at fxstreet. .com.

“The Fed is pumping a lot more money into the US economy and, by diffusion, into the rest of the world than anyone,” Trevisani said.

Markets will then watch for comments from Fed policymakers at the end of the month at a central bankers’ symposium in Jackson Hole, Wyoming.

A recent Reuters poll of strategists showed that most predicted a decline in the dollar over the next year. Read more

“We are in the phase of the economic cycle where growth and global trade will remain relatively strong, and this will create a bearish bias for the dollar,” said Vasilieos Gkionakis, global head of foreign exchange strategy at the Lombard Odier group.

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Currency auction price at 9:52 am (1352 GMT)

Reporting by David Henry in New York, Sujata Rao and Ritvik Carvalho in London and Tom Westbrook in Singapore; Editing by Timothy Heritage, Emelia Sithole-Matarise and Andrew Heavens

Our Standards: Thomson Reuters Trust Principles.