Dollar up broadly as week’s data outweigh jobs shock «
The U.S.dollar gained against most rivals Friday, as a week of data reassured investors that December’s dismal employment report wasn’t indicative of a broader shift in the economy.
Enlarge Image “While we haven’t had massive upside surprises to these reports, they have been strong enough to suggest that last Friday’s payrolls number was more of an anomaly,” said Omer Esiner, chief market analyst at Commonwealth Foreign Exchange, Inc. The economy last month added just 74,000 jobs, the smallest gain in three years.
The ICE dollar index /quotes/zigman/1652083/realtime DXY +0.33% , a measure of the greenback’s strength against six rivals, rose to 81.245 from 80.904 late Thursday. The WSJ Dollar Index /quotes/zigman/9625991/realtime XX:BUXX +0.25% , an alternate gauge of dollar strength, moved up to 74.51 from 74.29.
The ICE dollar index posted a 0.7% weekly gain, with support coming from data such as the better-than-expected rise in December U.S. retail sales and a pickup in regional manufacturing activity.
The Federal Reserve last month determined the economy could withstand the beginning of stimulus withdrawal and decided to reduce its monthly debt purchases by $10 billion to $75 billion this month. But the December jobs report prompted some speculation that the Fed’s plans for reducing stimulus could change. Bond purchases by the Fed have been seen as putting pressure on the value of the dollar.
A slew of Fed speeches this week, however, mostly emphasized that the central bank wouldn’t be deterred by one report.
“The dollar was under pressure as a result of mounting concerns, on payroll number, that economy may have slowed into the end of 2013,” said John Curran, senior vice president at USForex. “This week has alleviated some of those concerns.”
On Friday, data showed construction on new homes fell 9.8% in December to an annual rate of 999,000. Economists had factored cold weather into their forecasts, calling for a decline to a rate of 985,000, according to a MarketWatch poll. Overall, new-home construction starts last year hit the highest level since 2007.
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Separately, industrial production grew 0.3% in December, in line with expectations. Consumer sentiment fell in January to a reading of 80.4 from 82.5 in December, as measured by the University of Michigan and Thomson Reuters.
A move in the 10-year Treasury /quotes/zigman/4868283/delayed 10_YEAR 0.00% yield back to 3% could boost the dollar across the board, Esiner said.
Meanwhile, the British pound jumped against the U.S. dollar Friday after strong retail-sales data were the latest to underscore the U.K. economic recovery. U.K. retail sales rose 5.3% in December from a year earlier, marking the fastest annual pace in more than nine years. Retail sales were up 2.6% last month from November.
The pound /quotes/zigman/4867886/realtime/sampled GBPUSD +0.43% rose to $1.6410 from $1.6359 late Thursday. For the week, it fell 0.4% against the greenback.
The euro /quotes/zigman/4867933/realtime/sampled EURUSD -0.57% fell to $1.3528 from $1.3619 late Thursday. The euro’s losses against the greenback likely stemmed from an overnight spike in euro-zone money-market rates, said Commonwealth’s Esiner. European Central Bank President Mario Draghi pointed to tightening money-market conditions as a trigger for further easing after the central bank’s latest meeting.
The euro netted a 1% loss against the dollar this week.
The dollar /quotes/zigman/4868099/realtime/sampled USDJPY -0.03% traded at ¥104.26 versus ¥104.29, and was up 0.1% against the yen on the week.
In other forex action, the Australian dollar /quotes/zigman/4867876/realtime/sampled AUDUSD -0.44% dropped to 87.74 U.S. cents from 88.15 U.S. cents late Thursday. The Aussie on Thursday tumbled to a nearly 3 1/2-year low, rocked by speculation of an interest-rate cut by the Reserve Bank of Australia following a disappointing Australian jobs report for December.
For the week, the Aussie dropped 2.5% against its U.S. counterpart.
If there’s a further slowdown in growth in China — Australia’s largest export market — and continued deterioration in Australian economic conditions over the coming months, “the RBA will likely be forced to cut rates to 2% or below,” said Rivkin global analyst Tim Radford in a note Friday. “More accommodative policies will likely lend support to the broader Australian share market while dragging the Australian dollar to at least 85 [U.S.] cents.”