The US dollar rebounded on Friday against a basket of currencies from Thursday's more than five-month lows after stronger-than-expected US jobs and factory data boosted expectations for a less dovish Federal Reserve. Nonfarm payrolls increased by 215,000 last month, the Labor Department said, beating economists' expectations for 205,000 according to a Reuters poll.
Average hourly earnings increased 7 cents, while the unemployment rate rose to 5.0 percent from an eight-year low of 4.9 percent. The data came after the greenback's worst quarterly percentage loss in more than five years against a basket of major currencies, partly on Fed Chair Janet Yellen's dovish comments Tuesday that the central bank should proceed "cautiously" on raising rates.
"It's certainly not the kind of data that argues for the Fed to become even more dovish, and in that sense, it argues for the dollar's losses to slow," said Shahab Jalinoos, global head of FX strategy at Credit Suisse in New York. The dollar's gains accelerated after Institute for Supply Management (ISM) data showing its index of national factory activity rose to 51.8 from 49.5 the month before, above expectations of 50.7 from a Reuters poll of economists.
"We do know that the threshold for Yellen to act is very high, but as we get more pieces of the puzzle, the market is taking note," said Axel Merk, chief investment officer of Palo Alto, California-based Merk Investments, on the strength in the dollar after the US jobs and manufacturing data. The dollar index, which measures the greenback against a basket of six major currencies, was last up 0.42 percent at 94.975 after hitting a session low of 94.334 before the US data. The index fell more than 4 percent in the first quarter.