Dollar Gains Evaporate as Deutsche Bank Says Market Is `Gun Shy'

  • U.S. currency tumbled most in 6 years Thursday on ECB move
  • Jobs growth exceeds forecast, backing Fed rate speculation

A solid jobs report isn’t really helping the dollar.

The U.S. currency was little changed against the euro even after stronger-than-forecast employment data bolstered speculation that the Federal Reserve will raise interest rates this month. Investors are nursing their wounds after an unexpected European Central Bank outcome on Thursday caused the biggest decline in the dollar versus the euro in six years.

"The November payrolls data was very solid, but the foreign-exchange market looks gun shy after an epic Thursday," Alan Ruskin, global head of Group-of-10 currency strategy at Deutsche Bank AG in New York, said in an e-mail. "The data at least gives the dollar a fighting chance of more upside this year, but the price action is disappointing, most obviously on euro-dollar."

The dollar added 0.3 percent to $1.0937 per euro as of 10:53 a.m. in New York, after gaining has much as 0.8 percent. It tumbled 3.1 percent on Thursday, the biggest drop since March 2009.

After months of betting on diverging monetary policies in the U.S. and Europe, investors got whipsawed after the European Central Bank said it would keep the size of its monthly asset purchases unchanged, even though it committed to extending quantitative easing by six months.

U.S. payrolls increased 211,000 following a 298,000 gain in October that was bigger than previously estimated, a Labor Department report showed. The median forecast called for a 200,000 advance. The jobless rate held at 5 percent, a seven-year low.

"The report supports the view that the Fed will be hiking rates in December, which will continue to lift the dollar into year-end," said Sireen Harajli, a currency strategist at Mizuho Bank Ltd. in New York.

Before it's here, it's on the Bloomberg Terminal. LEARN MORE