The dollar rallied across the board on Friday, hitting its biggest daily target against the yen since mid-June as a stronger-than-expected US payrolls report suggested the central bank should keep short-term interest rates on hold.
The U.S. dollar index, which measures the greenback against a major basket of currencies, expanded gains on news that nonfarm payrolls rose by 528,000 jobs last month. It was the biggest gain since February and beat economists’ expectations.
The DXY, which remains below its July midpoint, rose 0.8% to 106.57. It was up 0.2% just before the release of the U.S. Labor Department’s employment report. The index rose 0.6% on the week.
Axel Merck, chief investment officer at Merck Investments, said the relationship was stronger than expected. This means that the central bank can no longer change course at this point. People who want the Fed to keep raising rates and slow hikes are sidelined by the report.
He added that the dollar strengthened against almost everything. The US has done well when there has been a general mood of recession in the world.
Against the yen, the dollar rose 1.5% to 134.99 yen. For the week, the dollar rose 1.3% against the yen.
Last week the Federal Reserve raised its benchmark rate by one percentage point. The US Federal Reserve has raised rates by 225 percentage points since March, but investors are weighing whether the Federal Reserve will be less aggressive in raising rates in the future. UXD for the year above 11%, amid prospects of a rate hike.
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