Dollar gains as blockbuster NFP revives Fed hold outlook
The GBPUSD extended its losses for the second straight day on Friday, trading at 1.3205, down 0.12% after a stellar US nonfarm payrolls report, which could refocus the Federal Reserve on battling higher inflation that has remained above target for five years.
The Bureau of Labour Statistics (BLS) revealed that the US economy created over 178,000 jobs in March, crushing forecasts of 60,000. Despite the positive reading, February’s print was further downwardly revised to -133,000, but on a positive note, the Unemployment Rate also fell to 4.3%, down from 4.4%.
In the meantime, the DXY Dollar Index, which tracks the greenback’s performance versus six peers, is up a minimal 0.12% and back above the 100.00 handle amid growing speculation that the Fed would maintain steady interest rates as the Middle East conflict prolongs.
Recently, the US S&P Global Services PMI contracted in March for the first time since January 23, falling from 51.7 in February to 49.8.
Chris Williamson, Chief Business Economist at S&P Global Market Intelligence, wrote: “The PMI survey data show the US economy buckling under the strain of rising prices and intensifying uncertainty, as the war in the Middle East exacerbates existing concerns regarding other policy decisions in recent months, notably with respect to tariffs.”
Williamson commented that the stagflationary environment of no growth and surging prices is a challenge for policymakers, as the S&P survey revealed a slowdown in employment.
Data from the Chicago Board of Trade (CBOT) showed investors trimmed dovish bets and predicted the Fed would hold rates flat for the year. US Treasury yields, particularly the 2-year, edged higher following the NFP release.
(Source: OANDA)
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