The dollar rallied to a four-month high versus a basket of major currencies on Friday, bolstered by a strong US non-farm payrolls report that followed a spate of upbeat economic reports this week, a scenario which should keep interest rates steady for now.
The US currency also hit a two-month high against sterling and the Canadian dollar, a six-week peak versus the Swiss franc and a four-month high against the euro. However, the dollar fell against the safe-haven yen, but that was more related to fears about the coronavirus outbreak in China. As the New York session progressed, the US job report showed it had the bigger impact on currency markets than the coronavirus. Data showed US nonfarm payrolls increased by 225,000 jobs last month, with employment at construction sites increasing by the most in a year amid milder-than-normal temperatures. Economists polled by Reuters had forecast payrolls would rise by 160,000 jobs in January.
"The data added to a resilient week for the US economy and could buy the Fed more time along the sidelines, a dollar-friendly situation," said Joe Manimbo, senior market analyst at Western Union Business Solutions in Washington
In midday trading, the dollar index, which measures the currency against a basket of rivals, rose 0.2% to 98.687. The US dollar was also up 0.3% against the Swiss franc at 0.9777 franc, gained 0.2% versus the Canadian dollar to C$1.3307 and climbed 0.2% versus sterling, which fell to $1.2894.
The greenback, though, fell 0.2% against the yen to 109.79 yen on what analysts said was more a safe-haven play for the Japanese currency. The euro fell to its lowest since October on Friday after German industrial output recorded its biggest decline in a decade in December.
The European single currency dropped to as low as $1.0946, and was last down 0.3%. It has lost 1.2% since Monday, putting it on track for its worst week since November. The offshore yuan was down 0.4% at 7.005 yuan per dollar, though it was still set for a small gain this week thanks to stimulus from China's central bank and Beijing's announcement of tariff cuts on US imports.
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