NEW YORK: The dollar rose to a three-week high against the euro on Monday, as Friday’s blockbuster US jobs report raised the likelihood of the US Federal Reserve keeping on with its inflation-fighting interest rate hikes for longer.
On Monday, the euro slipped 0.6% against the dollar to $1.0729, its lowest since Jan. 12, but not far from 10-month high hit on Thursday. Monday’s gains for the dollar followed a strong session on Friday when the greenback rose 1% against the euro.
“Friday’s NFP (nonfarm payroll) number solidified the likelihood of another 25 basis points hike and reduced the chances of an eventual rate cut at the end of the year, sending equities lower and the greenback soaring,” said John Doyle, vice president of operations and trading at Monex USA.
“Overall, the dollar’s decline since late November has been impressive. However, it now looks like it was a bit overdone,” Doyle said.
On Friday, data showed US job growth accelerated sharply in January while the unemployment rate hit more than a 53-1/2-year low of 3.4%, pointing to a stubbornly tight labor market, and a potential headache for Federal Reserve officials as they fight inflation.
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