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HomeCurrenciesDollar Recovers, But Weekly Loss Looms Following Robust Job Growth Data
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Dollar Recovers, But Weekly Loss Looms Following Robust Job Growth Data

The dollar exhibited strength, albeit still poised for a weekly decline, following a blowout in job growth figures for March, potentially delaying anticipated interest rate cuts by the Federal Reserve this year.

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According to the Labor Department’s closely monitored employment report released, nonfarm payrolls surged by 303,000 jobs last month, surpassing economists’ expectations. Reuters’ poll had projected 200,000 jobs, with estimates ranging from 150,000 to 250,000.

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The dollar index edged up by 0.048% to 104.27, after reaching 104.690. It experienced a volatile week, sliding from a five-month high to a two-week low after an unexpected deceleration in U.S. services growth heightened expectations of Fed rate cuts.

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Following the jobs report, U.S. interest rate futures scaled back the likelihood of a rate cut in June to 54.5%, as per CME Group’s (NASDAQ:CME) FedWatch tool.

Amo Sahota, director at Klarity FX in San Francisco, remarked, “It’s really encouraging the market to get more and more comfortable with this fact that we know rates have to come down, but do they really need to come down quickly? And do they need to come down as much?”

Investors have revised down their expectations of the extent to which the Fed might reduce rates this year, with U.S. rate futures now pricing in two cuts in 2024.

Brad Bechtel, global head of FX at Jeffries, commented, “That should continue to underpin dollar strength on a broad basis.”

However, robust economic conditions and escalating commodity prices, including oil, copper, coffee, and cocoa, are complicating the inflation outlook.

The dollar rebounded following remarks on Thursday from Minneapolis Fed President Neel Kashkari, suggesting that rate cuts might not be necessary this year if inflation remains sluggish.

Against the dollar, the Japanese yen weakened by 0.14% to 151.540. Former top Japanese currency official Tatsuo Yamazaki indicated that Japanese authorities may intervene to buy the yen if it dips significantly below 152 per dollar.

Japanese Finance Minister Shunichi Suzuki reiterated the government’s determination to take appropriate action against sharp declines in the yen.

Meanwhile, Bank of Japan Governor Kazuo Ueda hinted at the possibility of another interest rate hike in the coming months, citing potential inflation acceleration due to significant pay raises.

In other currency movements, the euro remained flat at 1.0837, while sterling dipped by 0.04% to 1.264. The Aussie slipped by 0.08% to 0.658.

In the cryptocurrency market, bitcoin declined by 0.53% to $67,589, while ether edged up to $3,328.7, marking a 0.09% increase.

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