MW: Dollar jumps on bullish hopes for strong U.S. jobs report
The dollar rose against all other major currencies on Friday, boosted by hopes that the closely watched nonfarm payrolls report will surprise to the upside and add pressure on the Federal Reserve to hike rates soon.
The ICE U.S. Dollar Index DXY, +0.24% rose 0.3% to 100.06, for a third straight day of gains, according to FactSet data.
Against the yen, the greenback USDJPY, +0.28% rebounded to buy ¬•113.13, compared with ¬•112.81 late Thursday in New York. The slide for the Japanese currency also came on speculation the Bank of Japan may have to weaken its accommodative stance.
But the key event on Friday was the U.S. nonfarm payrolls report out at 8:30 a.m. Eastern Time. After a strong print in the ADP private-sector jobs data out on Wednesday, analysts are hoping for an equally solid reading in Friday‚Äôs data.
Read: What to watch in the January jobs report
‚ÄúThe very strong print from ADP, which suggest that the NFPs could be 220K or more [has] given dollar bulls some room for hope, but the two reports are not perfectly correlated and have diverged in the past,‚ÄĚ said Boris Schlossberg, managing director of FX Strategy BK Asset Management, in a note.
Economists polled by MarketWatch expect to see 197,000 new jobs added to the U.S. economy in January.
‚ÄúAny miss will add to dollar woes as currency traders will become convinced that the Trump trade has lost its luster and liquidation could start in earnest with [dollar/yen] 112.00 once again being tested,‚ÄĚ he added.
The dollar index traded around a 14-year high in December and January on hopes the Trump administration would boost the economy and inflation, forcing the Fed to raise interest rates. However, the so-called Trump rally in the dollar and U.S. equities has faded in recent weeks.
In other currency trade, the pound GBPUSD, -0.3592% moved lower, continuing its decline from Thursday after what was perceived as a dovish statement from the Bank of England.
A disappointing reading on the U.K. services sector out on Friday further weighed on sterling. The pound bought $1.2476 on Friday, down from $1.2528 on Thursday and $1.2658 on Wednesday.
Read: Time to buy the beaten-down pound? Bank of America spots a sterling bottom
The euro EURUSD, -0.1952% exchanged hands at $1.0729, down from $1.0760 late Thursday.