Dollar Extends Gains on Dudley Comments After Mixed Jobs Report

  • Disappointing payroll growth offset by drop in jobless rate
  • Fed’s Dudley emphasizes ‘little pause’ in rate normalization

The dollar extended its rebound from session lows after New York Federal Reserve President William Dudley commented on the pace of interest-rate increases, erasing its initial reaction to the March U.S. employment report.

The greenback climbed against most major peers as investors weighed the weaker payrolls number against a jobless rate that unexpectedly sank to the lowest in almost a decade. The currency also tracked a rebound in the U.S. 10-year Treasury yield, after Dudley downplayed the length of any pause in short-term rate normalization by the central bank when it starts to shrink its balance sheet.

  • GBP/USD fells to 1.2371, fresh low for the day and week, and lowest since March 21, as USD built gains after Dudley comments
  • EUR/USD fell to 1.0581, lowest since March 10; expiry of EUR3.1b option at 1.0600 may have diluted strength of bids ahead of that level, allowing stop-loss sell orders below there to be tripped. EUR may drop toward technical support at 1.0525, March 9 low
  • USD traded at or near weakest levels of session against JPY and EUR immediately after release of jobs report, in which nonfarm payrolls increased by 98k vs 180k median forecast, and unemployment rate fell to 4.5 percent from 4.7 percent
  • “The market isn’t suddenly worried about jobs picture,” preferring to focus on the gradual path of Fed tightening, said John Hardy, head of foreign-exchange strategy at Saxo Bank A/S in Hellerup, Denmark
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