USD Up as Investors bet on Early Fed Taper due to Jobs Data

USD Up as Investors bet on Early Fed Taper due to Jobs Data

On Monday, August 9, the USD climbed as investors bet on the Federal Reserve’s early asset tapering due to the better than expected jobs data.

The Dollar Index, which trails the greenback in opposition to its six other rival currencies, inched 0.01% up to $92.808.

The USD got a boost from the robust jobs data which increased investor’s confidence that the Fed could begin tapering assets and hike interest rates sooner.

Based on the jobs report last Friday, the non-farm payrolls increased 943K from its previous 938K data against analysts’ forecast of 870K.

Additionally, the unemployment rate dropped 5.40% which is better than the expected 5.70% drop from the previous 5.9% record. 

Due to positive data, an analyst stated that the US jobs data were game-changers.

Furthermore, the US Federal Reserve had made conditions of tighter monetary policy for the labour market recovery.

Also, most policymakers backed the outlook that the inflation surge will prove to be transitory although there is a debate regarding its longevity.

Last week, Fed Vice Chairman Richard Clarida stated that the conditions for an interest rate hike could be met in the last quarter of 2022.

Now, investors are eyeing the US core consumer price index report on Wednesday. Based on analysts’ forecast, the month-on-month data will be 0.40% against the previously recorded 0.90%.

Moreover, the 10-year US Treasury yield reached a two-week high of 1.34% or 0.017 points to 1.305 last Friday.

Currency Exchange Rates over USD

In addition, the US currency climbed towards a four-month high against the euro. The EUR/USD pair traded 0.02% higher to 1.1764.

Meanwhile, the USD/JPY pair plummeted 0.03% to 110.22 as the Mountain Day holiday temporarily closed Japan’s markets.

The same with the AUD/USD and the GBP/USD pairs which both dropped 0.01% to 0.7353 and 0.01% to 1.3870, respectively.

Also, the USD/CNY slipped 0.09% to 6.4767. Earlier in the day, China’s year-on-year consumer price index climbed 1% and 0.3% month-on-month in July.

Additionally, its year-on-year producer price index in July rose 9%.

On the other hand, the NZD/USD and the USD/CAD both jumped 0.15% to 0.7019 and 0.09% to 1.2565, respectively.

Consequently, the USD/CHF and the USD/SEK both improved 0.05% to $0.9151 and 0.06% to 8.6695, respectively.