By Deborah Levine and Michael Kitchen, MarketWatch
NEW YORK (MarketWatch) — The dollar turned up against the euro and gained versus other major currencies on Friday after the U.S. government said the economy added far more jobs last month than economists anticipated.
The ICE dollar index DXY +0.38% , which measures the performance of the greenback against a basket of six currencies, rose to 79.219, from 79.010 in late North American trade Thursday.
The euro EURUSD -0.26% turned down to $1.3095 versus $1.3165 before the data and $1.3138 Thursday.
The dollar initially weakened after the Labor Department said the economy added 243,000 jobs in January, and the unemployment rate unexpectedly declined to 8.3%. A MarketWatch survey of economists projected that the economy added 121,000 jobs in January and the unemployment rate remained at 8.5%. Read story on payrolls.
But the dollar reversed higher as Treasury bond yields rose and the data were interpreted as possibly reducing the odds that the Federal Reserve will undertake a third round of quantitative easing this year and keep benchmark interest rates low for another three years.
“This is the kind of data that will challenge the Fed’s wisdom of putting a late 2014 date on prospective tightening, since any future changes to this date will be regarded as extremely market sensitive,” said Alan Ruskin, global head of G-10 foreign-exchange strategy at Deutsche Bank. “The data play strongly against QE3, although the Fed will surely keep it in the wings” as it continues its current policies.
Also, euro-zone finance ministers canceled a meeting that had been tentatively set for Monday, which was due to focus on Greece’s second bailout. Greece’s talks with international creditors are proving “very difficult,” Greek Finance Minister Evangelos Venizelos said, according to Dow Jones Newswires. See more on postponed meeting, Greece.
“News that the will not be an agreement on Greece before the weekend, meaning that the European ministers meeting initially planned for Monday will be postponed, also weighed on the euro,” said Marc Chandler, global head of currency strategy at Brown Brothers Harriman.
Japan, U.K., Australia
Among other major currencies, the Japanese yen weakened much more, after being under pressure since Asian hours. Finance Minister Jun Azumi said Friday trade in the currency appeared to be “one-sided” and could prompt “decisive steps.” See report on Azumi’s latest intervention warning.
Japan last intervened in the forex market in October when its currency was last near current levels, selling yen to push the unit lower, as the strong currency has hurt the nation’s important export sector. Japanese officials have warned recently of fresh moves to push down the yen but have yet to act.
“The Bank of Japan and the Ministry of Finance will be rejoicing because the Japanese are the single biggest beneficiaries of today’s strong jobs number,” said Kathy. Lien, director of currency research for GFT. “If nonfarm payrolls were abysmally weak, dollar-yen would have probably broken below ¥76, forcing the MoF to intervene in the yen but now, the pressure to intervene has been instantly lifted.”
The dollar USDJPY +0.59% traded at ÂĄ76.60, from ÂĄ76.18 late Thursday.
After being supported earlier by positive U.K. economic data, the British pound GBPUSD -0.11% turned down to $1.5775, from $1.5799.
The Australian dollar AUDUSD +0.45% , sometimes seen as a gauge of investors’ appetite for riskier assets, turned up to $1.0731, from $1.0708 Thursday.
