Home news Dollar jumps as US job figures beat forecast

Dollar jumps as US job figures beat forecast


The dollar has rallied strongly against the pound after official figures showed better-than-expected US job figures and some encouragement on wage growth.

The greenback gained against major international currencies when the US Labour Department reported 209,000 net new jobs were created in July – almost 30,000 more than analysts had expected.
There was also an uptick in monthly wage growth – something the US central bank is watching closely – though the annual rate remained at 2.5%.
In a further boost to the economy, separate data also showed a shrinking in the US trade deficit – with exports at their highest level for two years.
The core employment figures were seen as bolstering the chances of a further interest rate hike this year as the Federal Reserve moves to put the financial crisis behind the country by looking to shrink its massive portfolio of bonds.
It announced, in June, that it was intending to start unwinding the $4.2tn quantitative easing programme – used since 2008 to ensure the economy had enough cash to support recovery.
Any evidence of tepid confidence could have put its intentions at risk.
The US currency was a cent up against the pound, standing at just over $1.3030 on Friday afternoon.

The dollar has had a torrid time in recent weeks as investors become incensed by the lack of concrete information on President Donald Trump’s promised infrastructure stimulus.
That, in turn, has helped the pound rally following its collapse in the wake of the UK’s Brexit vote.
Naeem Aslam, chief market analyst at Think Markets UK, said he believed the Fed would keep wage growth firmly in its sights to determine policy.
He said: “If we are to see a rise in GDP in 2H (the second half of the year) we need the increase of household income to materialise faster.
“The data, however, is currently pointing to a different direction.
“Based on the 2Q (second quarter) GDP results it is consumers who made the largest contribution to growth.
“Therefore, we expect the wage and salary gains to remain a key indicator for economic growth in the second half of 2017.”

Source: SKY