Euro Rose high
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The dollar rose against the yen, but the euro recovered much of its initial loss against the greenback Friday after better-than-expected U.S. jobs numbers pointed to a U.S. economy marching forward.
What caused this high increase in EURO:
- Trading is likely to again turn volatile when London exits currency markets, around 11 a.m. EST.
- Positive news on fiscally strapped Greece–which successfully issued a bond on
- U.S. jobs data point to the Federal Reserve raising key U.S. interest rates.
- The ICE U.S. Dollar Index, which tracks the greenback against a trade-weighted basket of currencies, was at 80.680 from 80.571.
- The healing labor market, seen as key to the economy’s turnaround, leads investors to the greenback as the Fed is now seen as more likely to increase key interest rates and return expansionary monetary policy to normal.
- “The market is interpreting the news as generally favorable for the U.S. economy, with the dollar gaining strength almost immediately,” said Marc Chandler, global head of currency strategy at Brown Brothers Harriman in New York.
- The better-than-expected U.S. data also encouraged higher-yielding, risk-positive currencies, as it paints a brightening picture of the entire global recovery, leading the Australian, New Zealand and Canadian dollars to strengthen.
- The U.S. economy shed fewer jobs than expected in February and the unemployment rate was steady at 9.7% despite stormy weather on the East Coast last month, which the government said may have temporarily hit payrolls and work hours.
- The Labor Department, which carried out its surveys at the same time that the snowstorms battered the East Coast, said in a report Friday that nonfarm payrolls fell by 36,000 compared with a revised 26,000 drop in January.
- Economists polled by Dow Jones Newswires were expecting February payrolls to fall by 75,000 mainly because of the severe weather. The January figure was revised from an originally reported 20,000 decline.
- The positive U.S. data helped speed the yen’s fall against the dollar. The Japanese currency in Asian trading dropped on reports that the Bank of Japan might take additional steps to ease monetary policy, which could reduce Japanese interest rates and reduce the attractiveness of yen-denominated assets.
Also helping the dollar against the yen was the fall in the benchmark interbank lending rate for the Japanese yen, which fell below the corresponding dollar rate Thursday for the first time in six months. The move, which had been anticipated in recent weeks, brought the yen back to its status as the cheapest of the world’s heavily traded currencies.
“Now that the data is out of the way, people who wanted to buy the dollar are doing so,” Chandler said. “It should keep the dollar relatively well-bid.”
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