The US dollar leaped to its highest levels this year against a basket of currencies on Friday, despite disappointing US employment data for April. The US economy added fewer jobs than expected and although the unemployment rate dropped to near a 17-1/2-year low of 3.9 percent, this was because some jobless Americans left the labour force. Average hourly earnings rose 4 cents, or 0.1 percent, last month after gaining 0.2 percent in March. That left the annual increase in average hourly earnings at 2.6 percent.
"It is probably a pause, but it is nothing to stop the market," said Steven Englander, head of research and strategy at Rafiki Capital in New York. The data came after the Federal Reserve was also seen as adopting a more dovish tone at the conclusion of its meeting on Wednesday. "I think next week we are going to see a bunch of Fed speakers expressing confidence in the economy, basically telling the market that they drew the wrong conclusion from the statement," Englander said.
The dollar index jumped to 92.90, the highest level since December 28. The greenback also broke above parity with the Swiss franc, rising as high as 1.0022 francs. The dollar has gained as investors bet that the Federal Reserve will continue raising rates while other central banks including the European Central Bank (ECB) will act more slowly.
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