The US Dollar has been rallying since August 5. Friday’s jobs report made it stronger as the market sees the data to fuel Fed’s early asset tapering.
On Tuesday, August 10, the US Dollar Index, which trails the greenback in opposition to its six other rival currencies, climbed 0.04% to 92.977.
Last Friday, the better than expected jobs report pushed the US Treasury yields up to three-week highs and also gave a broad rally for the US Dollar.
Based on recent data, the non-farm payrolls gained 943,000 jobs which are higher than the previous 938,000 records. It is also better than the 870,000 analysts’ forecast.
Additionally, the unemployment rate also came at a positive rate. It dropped 5.40% which is better than the previous 5.90% and analysts’ estimate of 5.70%.
Moreover, the US Labor Department released its monthly Job Openings and Labor Turnover Survey for June.
The job openings, which gauge the labor demand, spiked 590,000 to a record high of 10.1 million.
The US Dollar sharply rose following these data as the upbeat jobs news supported the outlook that the Fed may quickly tighten its monetary policy.
In different statements, several Federal Reserve policymakers stated that a further jobs market recovery will be a condition to tighten its policy.
Last Monday, Atlanta Fed Bank President Raphael Bostic said he is expecting that the tapering of assets will start in the fourth quarter of 2021.
However, there is a possibility that an earlier move will happen if the jobs market will maintain its improvement pace.
Now, investors’ focus is set on Wednesday’s consumer inflation data report.
Wall Street analysts expect that the core annual inflation in July will drop 4.30%. This was after its spike to a three-decade high of 4.50% last June.
Currency Exchange Rates over US Dollar
Furthermore, the USD/JPY pair smashed 0.06% to $110.34 as the Japanese markets are reopening after a holiday.
Consequently, the GBP/USD also rose 0.03% to 1.3848 and the USD/CHF gained 0.01% to 0.9206.
On the other hand, the AUD/USD and the USD/CNY both fell 0.10% to 0.7326 and 0.03% to 6.4835, respectively.
Likewise, the USD/CAD and the EUR/USD also declined 0.03% to 1.2571 and 0.02% to 1.1737, respectively.
Consequently, the NZD/USD fell 0.23% to 0.6975. Investors anticipate an interest rate hike as the Reserve Bank of New Zealand will hand down its policy decision next week.