Dollar Declines as U.S. Adds More Jobs, Damping Demand for Safe Haven
The dollar fell against the euro after U.S. employers added more jobs than forecast in January, damping demand for the safety of the greenback.
Nonfarm payrolls rose by 243,000, after increasing by 200,000 in December, the Labor Department reported today in Washington. The median of 89 economists in a Bloomberg Survey had forecast an addition of 140,000. The unemployment rate fell to 8.3 percent.
“A positive number will arouse demand for riskier assets and cause movement away from the dollar,” Joe Manimbo, a market analyst in Washington at Western Union Business Solutions, a unit of Western Union Co., said before the release.
The dollar dropped 0.3 percent to $1.3178 per euro at 8:32 a.m. in New York. It rose 0.2 percent to 76.37 yen.
The Dollar Index (DXY), which IntercontinentalExchange Inc. uses to track the greenback against the currencies of six major U.S. trading partners, was little changed at 78.977.
At a meeting last month, the Federal Reserve pledged to keep its interest rate near zero until late 2014. The accommodative policy tends to drive investors away from the dollar as they seek higher yields elsewhere.
Three Fed officials said rates should be increased in 2012, three said 2013, five said 2014, four said 2015 and two said 2016.
Fed Chairman Ben S. Bernanke said yesterday the economy has shown signs of improvement while remaining vulnerable to shocks, and he called on lawmakers to reduce the long-term U.S. budget deficit.
‘Signs of Improvement’
“Fortunately, over the past few months, indicators of spending, production, and job-market activity have shown some signs of improvement,” Bernanke said in testimony to the House Budget Committee in Washington. “The outlook remains uncertain, however, and close monitoring of economic developments will remain necessary.”
Data this year have signaled the U.S. economy is recovering at a quickening pace. Manufacturing grew in January at the fastest pace in seven months, the Institute for Supply Management reported Feb. 1. Consumer confidence rose last month to the highest level in almost a year, according to a Thomson Reuters/University of Michigan index published Jan. 27.
The Dollar Index rose 0.4 percent on Jan. 6, when the Labor Department reported that payrolls increased by 200,000, more than the 155,000 forecast in a Bloomberg survey. The gauge advanced 0.5 percent on Dec. 2, when the unemployment rate unexpectedly dropped to 8.6 percent, the lowest level since 2009. It was later revised to 8.7 percent.
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