Dollar stays bullish on resilient U.S. jobs market

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By RaeWee

SINGAPORE (Reuters) – The dollar held near a near monthly high on Friday after US economic data highlighted a still-tight labor market that could keep the Federal Reserve on its aggressive hike-rate path.

The number of Americans filing new jobless claims fell to a three-month low last week, while layoffs fell 43% in December, data showed on Thursday.

A separate report also revealed that private employment rose by 235,000 jobs last month, far beating expectations for a 150,000 increase.

Against a basket of currencies, the US dollar index rose 0.9% overnight to near a monthly high of 105.27. It was last up 0.03% at 105.15 and was on course for a weekly gain of more than 1.5%, its biggest since September.

“Any anecdotes about tech job losses have yet to be reflected in headline employment data, but this suggests that while there are weaknesses in some pockets… there is still strong demand for labor from other parts of the economy,” he told Khoon Goh, Head of Asia Research at ANZ.

The dollar’s rise pushed sterling to a six-week low of $1.1873 overnight. It was last up 0.12% at $1.1922.

Similarly, the euro fell 0.8% in the previous session to a more than three-week low of $1.0515 and was last steady at $1.0519.

Against the Japanese yen, the dollar is up 0.6% to hit a one-week high of 134.045 yen overnight and last bought 133.44 yen.

Markets are now turning their attention to the widely publicized nonfarm payrolls report due later on Friday, with economists polled by Reuters forecasting the US economy to have added 200,000 jobs in December.

“We could be in for a positive surprise,” Goh said. “This will keep the Fed adamant to keep raising rates.”

Also on Friday will be the December flash inflation figures for the euro zone, where annual inflation is expected to come in at 9.7%.

Data from Germany, France and Spain have already shown a slowdown in inflation over the past month, suggesting that euro-zone inflation could be below expectations.

“The low inflation numbers, all the surprises we’re seeing seems to be weighing on the euro,” said Ray Attrill, head of FX strategy at National Australia Bank.

“But from a trading conditions perspective, the recent weakness in oil and gas prices that we’ve seen is actually very positive for the eurozone’s growth prospects… so I would actually expect the euro to find more support from that than it actually was. “

Elsewhere, the Aussie was last up 0.07% at $0.6757, after falling 1.3% in the previous session and most of its gains earlier in the week on news that China eased its restrictions on coal imports from Australia.

The kiwi rose 0.02% to $0.6224 after falling 1% on Thursday and was on course for a nearly 2% weekly loss, its worst since September.

(Reporting by Rae Wee; Editing by Jacqueline Wong)